Industry experts divided over ban impact

NEW DELHI: On Monday, the National Green Tribunal (NGT) passed an order stating diesel vehicles over 10-year-old in Delhi — about 2.8 lakh — should go off the roads

NEW DELHI: On Monday, the National Green Tribunal (NGT) passed an order stating diesel vehicles over 10-year-old in Delhi — about 2.8 lakh — should go off the roads in an attempt to reduce pollution.

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A similar ban was imposed by the NGT in 10 districts of Kerala in March, which is expected to impact 2,00,000 vehicles.

Carmakers said that the order may have a larger impact on consumers and the industry. “De-registering vehicles older than 10 years is extremely unfair to the consumers, who bought these vehicles conforming to the rules and regulations,” said a Maruti Suzuki spokesperson.

Less than 30% of Maruti vehicles sold have diesel engines. For Tata Motors and Mahindra and Mahindra (M&M) the share of diesel vehicles is higher. Tata Motors and M&M didn’t comment.

Delhi being the largest car market – 15-18% of all passenger vehicle sales – can set precedence to a nationwide ban on such vehicles.

Industry experts, however, said that the move is not all that bad. “The old cars were based on old technology… Companies will conform to 10 years as the effective life-cycle of the car,” said Anil Sharma, senior analyst at IHS World Markets Automotive service. The ban will also create demand for new car purchases.

But, for second-hand car buyers it isn’t happy news. “If a person bought a used 10-year-old diesel car yesterday, it can potentially be useless tomorrow, irrespective of what condition it is in,” said Kumar Kandaswami, senior director at Deloitte.

Similar policies, though not as stark as taking cars off the road, are there in developed countries. For example, in the UK, after three years, every year a car needs to go through a check and get an MOT certification.

Meanwhile, the NGT has directed the Ministry of Heavy Industries to give the status of electric and hybrid vehicles, and the benefits the ministry wishes to extend for disposal of old vehicles.

Will that mean new regulations even for petrol vehicles? “What if the industry shifts to electric and the tribunal comes up with a ban on petrol vehicles… The government should work on long-term plans, as that affects automobile firms’ investments,” said London-based Deepesh Rathore, co-founder of Emerging Markets Automotive Advisors.

But there is a silver lining. “The fact that the ban on new registrations was later changed would suggest this order may also be challenged,” said Kandaswami.