Maruti Suzuki’s RC Bhargava: Car sales will go down because of stricter emissions

The Indian government is working to bring stricter European-style emission rules to India next year. India’s largest car manufacturer – Maruti Suzuki has warned that the new rules will be a blow to the automobile industry, which was already in a slump before the pandemic hit the market.

R C Bhargava, Chairman, Maruti Suzuki has warned that the new rules will force the car prices to shoot up, which will lead to another blow to the industry, which is already not in a good shape.

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In an interview with Bloomberg, Bhargava said, “Demand will fall further, and instead of any growth, there will be a decline in the industry. The industry view is that it’s already suffering a decline because of Covid, and on top of that we add further to the cost of vehicles because of new regulations.”

Automobile manufacturers have already urged the government to defer the upcoming tougher emission standards last week. The Indian government plans to implement the new emission norms in two stages in April 2022 and then in 2023. The new emissions will force the carmakers to make changes to the vehicles that will reduce emissions by 13% or about 113 grams per kilometre of the drive.

Sources told Reuters that the automobile manufacturers are also seeking an extension in the deadline. As per the report, the manufacturers are seeking an extra year to implement the new norms and to meet the tighter rules on fuel efficiency. These rules are aimed to reduce carbon emissions.

CAFE rules

The new corporate fuel efficiency rules or CAFE will require the manufacturer to work extensively on the cars to cut the carbon emissions. The new rule will also force manufacturers to launch electric cars or vehicles that use alternative fuels.

With the ongoing pandemic and already a slowdown in the Indian automobile market, the manufacturers have expressed that it will be very difficult to make further investments to meet the stricter rules. Especially with the drop in sales figures and impact in the demand, which has caused the profits to fall down sharply.

Paris Agreement

India is one of the most polluted countries in the world with the air quality deteriorating every other year. India has signed the Paris Climate Agreement and bringing the new rules will help the country to meet its target to curb pollution.

India is currently the world’s fifth-largest automobile market and the country remains dependant on fuel imports from foreign nations. The new CAFE rules will also help the Indian government’s target to reduce fuel import bills.

The Indian government is also looking to reduce the import tax and duties on electric vehicles to help foreign manufacturers bring their products to India and price them aggressively. The government reduces duties, the likes of Tesla will be able to offer cars at aggressive pricing.

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