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India's Looking At Easing Fuel Efficiency Standards For Small Cars - Unfair Advantage To Maruti Suzuki?
India is contemplating easing fuel efficiency standards for small cars, following lobbying efforts by Maruti Suzuki, according to a new report. This move comes as the demand for small cars has decreased due to the rising popularity of SUVs, according to industry and government sources. Small cars have been crucial to Maruti's success in India, but their sales share has dropped below 50% from nearly two-thirds over the past two years.
The Indian government is concerned about the declining sales of affordable small cars. A senior official mentioned that Maruti Suzuki has advocated for more favourable emission norms, arguing that falling sales could impact the overall growth of the passenger vehicle market. "There should be more benefit for small cars. Maruti has been asking for that and we agree," stated the official.
Potential Changes in Emission Norms
Currently, India's Corporate Average Fuel Efficiency (CAFE) norms link permissible carbon dioxide emissions to a vehicle's weight for all cars under 3,500 kg. The proposed relaxation would apply to vehicles weighing less than 1,000 kg. This change could reduce pressure on manufacturers to electrify these models, benefiting companies with a larger share of small cars.
Maruti Suzuki stands to gain significantly from this potential easing, as 10 out of its 17 models weigh under 1,000 kg. Other manufacturers with at least one small model include Hyundai Motor, JSW MG Motor, Renault, and Toyota Motor.
Industry Reactions and Concerns
In a meeting held on June 17, India's Ministry of Heavy Industries consulted carmakers like Tata Motors, Mahindra & Mahindra, and Volkswagen about granting more leeway to small cars in future fuel efficiency norms effective from April 2027.
Although companies have not yet responded, any preferential treatment could be perceived as giving Maruti an unfair advantage. Meanwhile, individuals familiar with the discussions revealed to Reuters that applying different norms based on a car's weight or size had not been considered during consultations between the government and automakers.
Environmental Considerations
Suzuki Motor Corporation highlighted in its 2024 sustainability report that small cars are environmentally friendly due to their lower emissions and reduced material and energy requirements during production. Despite this perspective, India's Ministry of Heavy Industries did not comment on the proposed changes.
The easing of emission rules could potentially boost sales of small cars in India. However, it remains uncertain how this will affect other carmakers who may view it as favouring Maruti Suzuki disproportionately. The outcome will depend on further discussions among industry stakeholders and government officials.
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