Prices expected to increase significantly due to BSVI norms.
In an interview with ET Auto, RC Bhargava, Chairman of Maruti Suzuki India Limited, believes that small displacement diesel hatchbacks will go out of production by 2020.
Mr Bhargava was quoted saying:
After 2020, the price of diesel cars will rise further, and the smaller diesel cars actually will go out of production because a diesel car that costs Rs 5 lakh now, will cost a lakh more after Euro VI norms come into play. The equivalent petrol cars will still be about Rs 4 lakh. So, people will not buy diesel.
For diesel-powered cars to adhere to the upcoming BSVI emission norms, manufacturers will have to make expensive changes to the diesel powertrain, which is expected to increase the final price by INR 1 lakh. An equivalent petrol-powered compact car complying to BSVI regulations, however, would require only minor adjustments, hence why prices won't be as heavily affected as its diesel-powered counterparts.
A wide gap (by 2 Lakhs) between the prices of petrol and diesel versions of the same car is expected, which may nudge more prospective customers in the compact car segment to shift to petrol power.
Manufacturers like Hyundai and Maruti are also investing in low cost mild-hybrid systems for compact cars, which is expected increase fuel mileage to figures closer to equivalent diesel cars, whilst claiming tax incentives from the government's FAME initiative and discounts forwarded to customers, thus increasing the appeal of petrol cars.