Soon, small cars may not be small

LiveMint: India’s small cars may no longer be small—in terms of size and their price-tags too—once new regulations on safety and emissions come into force.

Many of the models will need to be re-engineered, necessitating structural reforms such as using more steel to allow vehicles to meet new crash-test norms, adding airbags and anti-lock braking systems for increased safety, and installing diesel particulate filters and Selective Catalytic Reduction (SCR) technology to help diesel cars meet the Bharat Stage VI emission norms.

All that means more cost and space, according to Maruti Suzuki India Ltd chairman R.C. Bhargava. Small diesel cars, he says, will see Rs.1 lakh increase in their price tag. Other experts say the increase could be as much as Rs.2 lakh in some cases. And the design of many small cars will need to be changed to house all the extra components. For instance, SCR technology involves a second tank inside the fuel tank. That could add up to 4-5 litres of space in the case of a small car.
Small petrol cars, too, will cost more on account of safety equipment.

Tim Leverton, head of advanced engineering at Tata Motors Ltd, said the new norms had affected the engineering of the company’s future products, adding a layer of costs and complexity.
The prices of most petrol models such as Maruti Alto, WagonR and Celerio, Tata Motors’ Nano, and Hyundai Motor India Ltd’s Eon and i10 will go up, largely due to safety norms, while the new emission norms will affect diesel variants of both small cars (mostly made by Maruti) as well as larger models, including sports utility vehicles built by Mahindra & Mahindra Ltd.

“The fact that safety and emission (equipment) will cost money cannot be a reason for not doing it. There is no running away from it. It will cost money. The selling price could go up by as much as Rs.1.3 lakh, including taxes. That will affect affordability (for diesel vehicles) but that’s the reality,” said Pawan Goenka, executive director, Mahindra & Mahindra.

But it is small diesel cars that will bear the brunt in terms of the percentage increase in price. A Maruti executive, who spoke on condition of anonymity, said: “We have smallest diesel engine on Celerio (prices start at Rs.481,000, ex-showroom Delhi). If that has to be modified, the cost impact (Rs.1 lakh in Celerio’s case) becomes a big part of the total cost. But if the basic cost of a car is Rs.30 lakh, then the impact is not that much.”

Mahindra’s Goenka added that the government, suppliers and original equipment makers need to work together to minimize the cost impact.
“It is important that whatever regulations have been put in place do not change in this time frame so that we can work in a planned manner,” Goenka said, adding all companies are working to meet the 2017 deadline for safety norms for new vehicles. That means any new model launched after that deadline needs to adhere to the new norms.

Older models have till 2019 to meet them. The deadline for the Bharat Stage VI emission norms is 
April 2020.

“On the emissions front, everybody is looking at getting the best technology possible,” Goenka said. “Indian companies will have no specific disadvantage in meeting emission norms, as most companies approach global consultants for this work.”