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Impact of SC ruling against diesel cars: Sale of Mercedes, BMW, Audi to be hit

We explain the impact of today's Supreme Court judgment.

Written by Vikas Yogi | New Delhi |
Updated: December 16, 2015 3:57:41 pm

Diesel vehicle ban, Diesel car ban, Diesel cars ban, Diesel vehicles ban, NGT Diesel vehicles, Diesel vehicles news

A Mercedes Benz car during a launch show.

Agreeing partially with the National Green Tribunal’s (NGT) suggestions, the Supreme Court on Wednesday announced a number of measures to curb pollution in the national capital. The apex court ordered to ban registration of diesel cars and SUVs with capacity over 2,000cc till March 31, 2016. The Supreme Court also agreed with the demand of banning the entry of trucks not bound for Delhi to enter Delhi through NH 1 and 8.

Here we list the impact of today’s Supreme Court judgment:

1. Minor impact on mass-vehicle producing carmakers

Delhi’s market share in total volume of passenger car sales in the country is about 7 per cent. While carmakers like Toyota, Ford and Honda get up to 15 per cent of their sales from Delhi, it’s 7 per cent for the country’s top two carmakers – Maruti Suzuki and Hyundai. And since diesel variants contribute around 30 per cent in the total sales of most mass-vehicle producing carmakers, the impact will not affect them as badly as it will affect utility and luxury
carmakers.

2. Toyota could see a drop in its sales; Mahindra will escape 

Among major carmakers, Toyota Kirloskar Motor will be the most affected player as two of its top-selling models – Innova and Fortuner – feature engines above 2,000cc. Delhi being a crucial market for Toyota, accounting for up to 15 per cent in its total sales, the ruling might affect its sales badly. Mahindra & Mahindra that gets almost 100 per cent of its sales from diesel-powered vehicles may not see any major fall in its sales as the Delhi market contributes only 2 per cent in its overall retail.

3. Mercedes will be the most affected luxury player, followed by BMW and Audi

The decision of banning diesel vehicles above 2,000cc engine capacity will mainly affect luxury carmakers including the German trio – Mercedes Benz, Audi and BMW since more than 70 per cent of their sales come from diesel vehicles. Audi India’s sales may not get affected as badly as that of Mercedes-Benz since the former’s top-selling models like the A3, A4, A6, Q3 and Q5 feature engines below 2,000cc. Top-selling model variants of BMW – 1 series, 3 series, 5 series, X1 and X5 – are also below 2,000cc.

On the other hand, Mercedes-Benz India’s top-selling models including the C-Class, E-Class and GLE-Class, feature engines above 2,000cc. Mercedes-Benz India achieves nearly 20 per cent of its total sales from the Delhi-NCR market.

4. No affect on app-based taxi operators

Since app-based taxi operators like Uber and Ola already have CNG-powered taxis for within Delhi commute. The affect will be on private cabs, which are being asked to convert to CNG by March 1, 2016.

5. Indirect impact on commodities coming to Delhi 

Besides ruling a complete ban on the entry of trucks not bound for Delhi through NH1 and NH8, the Apex court has also imposed a sizeable environment compensation charge (ECC) on big trucks and light commercial vehicles. Doubling the ECC, big trucks and LCVs are now being asked to pay Rs 2,600 and Rs 1,400 respectively. This may indirectly increase the prices of commodities destined for Delhi market due to hike in transportation cost.

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