Supreme Court's order allowing only Bharat Stage (BS) VI cars to be sold in India after April 1, 2020, will lead to increase in petrol and diesel vehicles by 5% to 10%, according to experts.
Auto industry sources said in view of the technology upgrade, prices of petrol cars are expected to go up by at least Rs 20,000-30,000 while the prices of diesel passenger vehicles may surge Rs 75,000-1,00,000.
The Bharat Stage emission standards are instituted by the government to regulate output of air pollutants from motor vehicles. The BS IV norms have been enforced across the country since April 2017. The government has proposed to give a grace period till June 30, 2020, to automobile manufacturers to sell BS-IV-compliant four-wheelers manufactured till March 31, 2020 and till September 30, 2020 for the sale of BS-VI non-compliant heavy transport vehicles.
Currently, there are only three BS-VI-compliant cars available in India – Mercedes-Benz's S 350 d and E-class All-Terrain, and the BMW X1 sDrive20i. Following the apex court order, most carmakers will introduce BS-VI-compliant engines.
KPMG partner Vinodkumar Ramchandran told DNA Money that original equipment manufacturers (OEMs) have 18 months to prepare for BS VI and most have clear plans to meet the target. ''Depending on the segment, the cost increase could vary from 5-10% to switch to BS VI. If the oil prices remain high, it could impact vehicle volumes next year and combined with the additional cost to switch to BS VI norms, there will be significant margin pressure over next two years and OEMs may have to start cost management right away,'' he said.
PwC partner & leader Kavan Mukhtyar also estimated that new models are likely to be accompanied by price increases of at least 6% to 8%. ''This may trigger a wave of advancing of vehicle purchases by customers. As a result, we see a spike in vehicle sales over the calendar year 2019 consequently putting tremendous pressure on the automotive component suppliers,'' he said.
Mukhtyar said the SC judgement will push the automakers to stop production of BS IV vehicles earlier. ''As a result, with the model year change most OEMs will make the shift to BS VI vehicles by January 2020,'' he said.