India's largest carmaker Maruti Suzuki has announced that it will stop manufacturing diesel vehicles from April 1, 2020. The high cost of upgrading existing diesel engines to the BS 6 norms propelled the company to take such a decision.
At the moment, Maruti Suzuki sells diesel vehicles like Swift, Dzire, Vitara Brezza, Ertiga, Baleno, Ciaz and S-Cross in the Indian market. The company has two diesel engines — the 1.3-litre motor sourced from Fiat and the newly-developed 1.5-litre DDiS 225 diesel mill. Both the diesel engines will not be able to meet the upcoming BS-VI (BS6) emission norms.
The company will try to focus on compressed natural gas (CNG) and hybrid technology driven vehicles to compensate the vacuum created by the phasing-out of diesel vehicles.
Maruti's decision today is also precipitated by a number of events that have taken the sting out of diesel car demand in India. Till 2014, the high differential in the price of diesel and petrol, which peaked at Rs 27.19 per litre in July 2012, made diesel the preferred choice of fuel for customers.
According to Ajay Seth, Maruti's executive director, Finance, overall increased discounts offered to customers and commodity costs had an adverse impact on the financials of the company in FY 19 and the company will cut costs in different part of its operations to stabilize the operating margins in FY 2020.