The Supreme Court ban on diesel vehicles in Delhi will hurt companies like Mahindra & Mahindra (M&M), Toyota Kirloskar and luxury car makers like Mercedes Benz, which have a sizeable portfolio of vehicles in the diesel segment.
The Supreme Court has ordered a temporary ban on the sale of large diesel cars in Delhi to combat toxic smog in the city.
These car makers are disappointed with the verdict and are planning to rework their future programmes.
People who have already booked a sports utility vehicle will now seek a refund and choose to buy other alternatives or get their vehicles registered outside Delhi, say market watchers.
M&M, almost 98% of whose vehicles are of the diesel variant, said that it respects the Supreme Court decision. “The company would hope that at the end of the interim period of March 31, 2016, the judiciary and the regulators would look at the impact of these measures and take a holistic view on improving the air quality of Delhi, taking into account the overall impact of each action,” said M&M.
“In the short-term, the honourable court’s order affects the sales of some of the company’s products in NCR. The vehicles affected represent 2% of the company’s total monthly sales. The company is in the process of evaluating various options to work within the framework provided by the Supreme Court,” the company added.
Chairman Anand Mahindra accepted the apex court’s decision. In a tweet after the announcement, Mahindra said: “…even if we believe the decision on diesel vehicles isn’t optimal, we will honour it and comply with their stipulations…”
German car maker Mercedes Benz was far more critical of the court’s order. With Delhi alone accounting for around 20% of the luxury vehicles sold in the country, Mercedes Benz will be among the worst hit as almost its entire diesel model range is powered by engines above 2,000 cc.
“This ban on diesel engines also creates an environment of uncertainty and will severely impact our expansion plans and future investments put in place for the Indian market. We also have to consider the loss of jobs that this will result at the dealerships, at the vendors producing diesel engines and also negatively impacting our own workforce,” the company said.
Toyota Kirloskar, which will also be hit by the ban, said that its global approach has been to make vehicles that will effectively reduce pollution but addressing the issue by banning SUVs will be insufficient.
“To improve the air quality from vehicle point of view we must take a comprehensive view of various factors causing pollution. These can be categorised into areas like Identify hot spots causing pollution including traffic congestion areas; contribution to pollution by industry; coaching proper driving habits to drivers considering the stop start nature of traffic and compliance to various emission norms,” said Vikram Kirloskar, vice-chairman, Toyota Kirloskar Motor.