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The Indian auto industry's shift to the more stringent BS6 emission norms will soften demand for cars, cautioned Kenichi Ayukawa, managing director and CEO, Maruti Suzuki. "Let us accept, during this transition we may experience fluctuations and even some contraction in demand...It may take a little time, till BS6 becomes the new normal for the customers," Ayukawa said at the BS6 conclave held recently by our sister publication Autocar Professional in New Delhi.
He said the shift is one of the biggest, boldest and fastest for any nation to leapfrog from BS4 to BS6. "Worldwide, the transition has been in phases first from Euro 4 to Euro 5, subsequently to Euro 6. In Japan too we followed a step by step approach for such technology changes," Ayukawa said.
The head of the country's largest carmaker also added that Maruti is set to meet the April 2020 deadline for BS6 ahead of schedule and has augmented its capacities towards meeting the tight timeline. He, however, cautioned that such technological interventions come with additional investment, which will make cars pricier. According to estimates, diesel cars are expected to get dearer by up to Rs 1 lakh while petrols will get pricier by about Rs 25,000.
Ayukawa said customer education will be key in managing the transition phase and the carmaker is preparing its sales team to educate customers on the merit of these technological changes. He also called for speedy availability of BS6 fuel, saying, “the real impact of BS6, will come only if BS6 fuel is available across India.”
Some GST roll-back can revive sales
The auto industry is grappling with a slump in demand, which resulted in growth plunging 21 percent to 2,39,347 units in May 2019, the steepest drop in 18 years.
Ayukawa called for government intervention to revive consumer sentiment saying, "some GST relaxation will go a long way to bring back sales on track." At present, a rate of 28 percent GST is levied on passenger vehicles.
Vehicle scrappage policy is the need of the hour
Importantly, he urged the fast-tracking of a vehicle scrappage policy to get vehicles that do not comply with current emission and safety standards off the roads. “Sadly, we offset all that we gain with BS6, with older vehicles still plying on the roads. Old vehicles, including buses, trucks, cars, two-wheelers and three-wheelers, need to be systematically taken off the road. A proper time-bound scrappage policy is long due from the government,” urged Ayukawa.
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