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Tata Motors might stop production of small cars powered by diesel engines. This is due to the expected drop in demand for diesel-powered cars once the BS-VI emissions norms kick in, starting April 01, 2020.
Tata Motors feels the costs of developing a smaller diesel engine far outweighs the demand for such cars. More importantly, the prices of such cars will increase significantly, causing it to be out of reach for its target audience.
Car manufacturers are becoming more environment conscious with every passing day and so are governments. The Indian government has been tightening the noose on car manufacturers in terms of emissions and will in effect be implementing the BS-VI emissions norms starting April 01, 2020.
Bharat Stage emissions norms are set by the government to ensure all vehicle manufacturers comply with the set standards for exhaust emissions. The Indian government has decided to skip the BS-V emissions stage and go directly to BS-VI which is on par with the Euro-VI emissions norms being implemented in Europe.
This is giving most manufacturers a nightmare as the existing engines have to be upgraded significantly in order to keep it in line with regulations. While some manufacturers like Ford have decided to upgrade their existing engine line-up, some like Maruti Suzuki decided to call it quits on their diesel-powered small cars.
Maruti Suzuki recently announced that all of its small hatchbacks would be powered only by petrol/CNG engines. Now, Tata Motors has made a similar announcement.
Mayank Pareek, the president for Tata Motors' passenger vehicle business was quoted as saying, "We feel that low demand for entry and mid-size diesel models will not justify the high costs involved in developing a new small capacity engine. Moreover, around 80% of the demand in the said segment is for petrol variants, and thus, the additional required investment does not seem viable."
Tata Motors' best-selling product is currently the Tiago and the hatchback is available in diesel and petrol variants with the diesel variant being powered by a 1.0-litre engine.
The company's Notchback offering – The Tata Tigor – is offered in petrol and diesel variants with the diesel model being powered by a 1.05-litre diesel engine. Tata also has its older products like the Zest and Bolt that are powered by 1.3-litre diesel engines.
It seems like all of these cars will be left with just petrol engines after 01 April, 2020. However, Tata's bigger cars like the Nexon, Harrier, Hexa, etc, will continue to use diesel engines. The costs of developing new diesel engines are high and Mayank Pareek also said, "Given that these high costs will ultimately have to be passed on to the end customer, the sale of diesel vehicles will logically see a decline in the industry."
Both Maruti Suzuki and Tata are among the largest auto manufacturers in India. The best-selling small cars and hatchbacks are from one of these two brands. With both manufacturers calling it quits on small diesel cars, the future of diesel-powered cars in India is in turmoil.
Diesel powered cars were always more expensive than their petrol-powered counterparts and this was due to the higher cost of components. Developing new diesel engines that comply with BS-VI norms will cost a lot and the cost will ultimately be passed down to the buyer.
Hence, diesel cars will slowly die in the Indian market. Adding to the pressure is the fact that electric vehicles are emerging and major manufacturers like Maruti Suzuki, Tata Motors and Mahindra have been working on EVs for a while now.