Sunday, February 5, 2017

Is this the beginning of end of small diesel engines, in India?

Late last month car market leader Maruti Suzuki   brought down the axe on the diesel variant of the Celerio following months of lackluster demand for it. While the Delhi-based company officially maintains that the diesel variant has not been phased out yet Maruti ’s website does not list the diesel variants of the Celerio which was the smallest diesel engine developed by Maruti. Other new models such as Renault Kwid and Datsun RediGo have been launched only with a petrol powertrain and do not have a diesel variant. The French car maker has declined to make any fresh investments in small diesel engine technology. At least 80 percent of Tata Motor ’s newest model Tiago is powered by a petrol engine, even as the company is believed to have stopped new investments in small diesel engine technology. The company thus abandoned plans mid-way of having a sub-2 litre diesel engine on even larger products like utility vehicles. The Celerio diesel was launched only 18 months ago with Maruti’s parent company Suzuki Motor Corporation investing Rs 900 crore for its development. Progressively, more and more auto makers are shying away from investing in small diesel engine technology owing to high development costs and dying consumer demand. Only six years ago the scene was completely the opposite when four in every five cars sold was powered by a diesel engine with waiting periods stretching up to six months. Speaking to Moneycontrol Tim Leverton, President and Head, Advanced Product Engineering, Tata Motors, said, “We are focusing on small gasoline engines which are better powered. We will see in future that performance which were coming from 1.4-1.6 litre engines would come from 1.2 litre engines. We have reprioritized our investments in diesel where it counts such as in utility vehicles and larger sedans.” When the new emission regulations kick in from April 1, 2020 it would be a death knell for small diesel engines. Manufacturers say that the cost of producing diesel engines will be much higher compared to today.   "It will put a lot of pressure on costs and development. The gap between petrol and diesel vehicles today is Rs 1 lakh; it will go up to Rs 2 lakh when the new regulations come in. The customer will not be willing to pay especially if it is even slightly irrelevant to him," said a senior executive from Maruti Suzuki.   With some new generation petrol-powered cars like Tata Tiago, Maruti Suzuki Celerio and Renault Kwid giving a mileage of 23-25 km per litre, they are on par with diesel counterparts, which cost at least Rs 1 lakh more and are also expensive to maintain. “As time passes diesel technology does come under pressure for lightest vehicles because of cost pressure and other technologies come up in scale like hybrids. The trend about reduction in diesel demand will continue,” added Leverton. Unable to upgrade to BSVI Tata Motors will have to phase out almost all of its present generation cars like Indica and Indigo which are primarily run on diesel engines. There is a question mark on continuation of utility vehicles like Sumo and Safari, too, even as the company moves to two new advanced vehicle platforms.   “In larger vehicles diesel is still the best option in terms of fuel economy and carbon emissions. We saw that when diesel prices went up and emissions tightened there will be a consumer switch to gasoline,” added Leverton.

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