As the BSVI deadline approaches, more and more carmakers plan to axe out their small diesel engines as upgrading it to the new stringent emission standards is proving costly and does not balance the economies of scale, as demand for small entry level diesel cars is less compared to the petrol variants. The BSVI upgraded diesel engines will create a wide gap between the petrol and diesel models of the same car and will repel buyers from buying the diesel variant as the added cost will not justify in fuel savings over the vehicles life cycle. Also, it is important to note that the price gap between the two fuels has also narrowed, driving down the diesel car sales even further.
Manufacturers such as Tata are planning to discontinue the 1.05-litre, three-cylinder diesel engine that powers the Tiago and the Tigor, Mahindra plans on discontinuing the 1.2-litre, turbo-diesel which powers the KUV100 and the 1.3-litre, Fiat Multijet engines powering a wide range of Maruti Suzuki cars are being planned to be pulled out of the market as well.
But, the South Korean competitor, Hyundai is likely to fill the hole by upgrading the 1.2-litre, three-cylinder diesel engine to BSVI standards that does duty on the Grand i10 and Xcent. With BSVI norms in place, carmakers are likely to pull the plug on approximately 15 diesel cars which contribute to around 3,00,000 units per annum with the share of 1,20,000 units only from the Maruti Suzuki stable.
According to a media report, Maruti Suzuki estimates that around INR 2,00,000 will be required for the BSIV diesel engine to be upgraded to BSVI engine, whereas Hyundai has calculated a cost of around INR 30,000 to INR 40,000 for the same which is significantly lower than the Indo-Japanese manufacturer.
Though the small entry-level diesel market is declining and more people are opting for the petrol-powered counterparts, there is still a large piece of the diesel car market which Hyundai believes it can dominate, in the near future.