In around two to eight years, India will be moving to the Euro 5 and Euro 6 emission norms. Eventually, the compact diesel car as well as SUV market segments might become the biggest sufferers.
As per the automobile industry sources, this move from the Bharat Stage 4 norms to the Euro 5 and beyond will need vital investment in latest technologies. These new technologies include DPF (Diesel Particle Filter) and SCR (Selective Catalytic Reduction). This will increase the price of the small diesel cars and SUVs by around Rs 65,000 to Rs 1 lakh. On the other hand, the petrol engines will need only simpler technology tweaks that will increase their price by a maximum of Rs 7,000 to Rs 11,000.
The sources say that due to the sophistication of the technology, the small vehicles based on diesel engines will become too expensive as they become Euro 6 compliant.
As of now, the diesel engines need a catalytic converter to be compliant to Bharat Stage 4 norms. In order to be BS 5 compliant, the engines needs calibration and DPF installation and. Also, to move to BS 6, the engine needs calibration and both DPF and SCR have to be installed. At each level, the increase in cost will be around Rs 30,000 to Rs 50,000 for the end users. The gasoline engines will need ECU changes for the emission level change and the price of these will increase be Rs 3,000 to Rs 6,000 at each level.
As per Kumar Kandaswami, the Senior Director at Deloitte Touche Tohmatsu India, the additional cost for the mandatory safety features will increase the price pressure in the mini segment. This will lead to a migration to the used car segment from the entry level small cars segment by the first time buyers.
The automobile manufacturers are forcing the government to increase the time to get their resource strategies and plans in place. While the BS 4 norms will be followed nationally from 2017, the time frames of BS 5 and 6 norms are under negotiation.