The Bharat Stage VI (BS-VI) upgradation may result in a hike as steep as Rs 3.5 lakh in prices of diesel-powered trucks and buses.
The industry is consequently bracing for a surge in demand later this year, as customers rush to dealers before the BS-VI norms kick in.
Talking to analysts after the final quarter results ended March, Vinod Dasari, managing director, Ashok Leyland said: "Impact of BS-VI depends on the type of vehicle. A vehicle costing roughly Rs 20 lakh has an engine costing Rs 2 lakh at BS-IV. It would be higher if there are additions made to it.
It will cost Rs 2-2.5 lakh to upgrade this engine to BS-VI and you have to add other costs into it which would push total costs to go up by Rs 3-3.5 lakh," Dasari said.
BS-VI will be implemented from April 1, 2020 and the industry will have to be ready with their production at least six to nine months prior to the deadline. The hike of Rs 3.5 lakh may be a conservative one as research companies like Kotak Institutional Equities has predicted a rise of 23 percent in prices of diesel-powered commercial vehicles.
Diesel passenger vehicles will see an increase of 20 percent, light commercial vehicles will see hike of 13 percent. Since a majority of commercial vehicles are diesel driven the impact will be that much more. Petrol and CNG-powered vehicles will see a modest increase.
Spurt in demand
The levels of particulate matter, sulphur, nitrous oxide, carbon monoxide and hydro-carbons would have to be reduced to a great extent after implementation of BS-VI in diesel engines.
To avoid the steep hike in prices the industry is expecting a continued spurt in demand throughout this year and next. “There will be pre-buying because there will be cost increase and it has happened in other parts of the world," added Dasari.
As per data supplied by the Society of Indian Automobile Manufacturers (SIAM) medium and heavy cargo vehicles (MHCV) closed last year with a rise of nearly 20 percent to 3.04 lakh, and light commercial cargo vehicle (LCV) grew by 30 percent to 4.67 lakh units.
This growth jumped 214 percent to 25,779 units in MHCV in April and 46 percent to 40,042 units in LCV.
Tata Motors is India’s largest commercial vehicle maker, followed by Mahindra & Mahindra and Ashok Leyland.
“Fundamentally, the NOx emissions and particulate matter are the highest in diesel vehicles. Diesel is very fuel-efficient but these two irritants are a little complex to reduce. In diesel, there are technologies to bring down the NOx and PM but those technologies are a little expensive but it is not that it is not possible," said a senior executive from Ashok Leyland’s rival company based in Chennai.
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