Home-grown auto major Mahindra and Mahindra have said that it is ready to launch its BS VI compliant vehicles next year and will be able to roll out the petrol range in 2019 itself. The Bharat Stage VI (or BS-VI) emission norms would come into force from April 1, 2020, across the country. Currently, the vehicles sold in the country conform to BS-IV emission standards.
"We will be ready with our first gasoline BS VI ready vehicles by the end of the second quarter of this year," Mahindra and Mahindra (M&M) Managing Director Pawan Goenka said. "We would probably be able to launch gasoline vehicles as soon as we are ready because it does not require a BS VI fuel but we will not be able to launch the diesel vehicle till the fuel becomes available throughout India. I am assuming it to be somewhere in late December and early January," added Goenka.
"The only entrant we are not taking to BS-VI is the 1.2 diesel. Which means the only passenger vehicle that does not go to BS VI is the KUV100. Everything else will go to BS VI. We have also stopped the Jeeto van because of the very high cost of meeting the emission requirement," he added.
The company has invested Rs 1,000 crore for a transition to BS VI. On the cost increase due to the transition, Goenka said it is too early to talk about that as some fine tuning is going on which may reduce the cost further.
"Of course, the diesel cost increase will be more than petrol but it is not so much that diesel will become unaffordable except the small engine like 1.2-litre," he said. "We believe that for passenger vehicles the 1.2-litre diesel would be hardly justified because that is a vehicle that costs Rs 6 lakh and therefore the cost impact of 1.2 diesel would be hard to justify and therefore many of the OEMs are deciding not to do the 1.2 diesel," he added.
Asked if the company would absorb the cost, Goenka said it is impossible for the company to absorb that cost delta. Also, there is a GST impact. "We have to recover our Rs 1,000 crore investment and also make some profit. When you add up all these there is going to be a reasonable increase in price and it's impossible for us to absorb," he said.
Goenka also mentioned that the customers would be happy if the price increase for larger vehicles would be around a lakh and for smaller vehicles Rs 80,000.
The last date of selling BS-IV vehicles is March 31, 2020, which Goenka said was a problem. "Therefore we have to start selling BS VI from sometime January or latest by February but we cannot delay beyond February because we won't get the portfolio right. The fuel has to be available in place pan-India latest by January." He added that the company would also have to inform its suppliers on how many BS-IV vehicles it plans to make, somewhere around October-November.
"Not a single BS IV vehicle can be converted into BS VI. Whatever is not sold on March 31, 2020, is scrap. Therefore, we have to take firm call latest by mid-November on how many BS-IV vehicles we want to make and ramping up of BS VI because these components are very complex to make and any last minute change will be disastrous," he said. On its gasoline engine portfolio, the company would have 0.6-litre, 1.2-litre, 1.5-litre and is also working on another engine.
He informed that the 1.5-litre will be first launched in SsangYong in the fourth quarter of the year and will come into Mahindra vehicles in the next financial year. Goenka termed ramping up and down the entire volume of the automotive business in next 2-3 months a humongous challenge for suppliers and the plants.
Last three and a half years have perhaps been the most challenging years for any product development and sourcing organization in the auto industry in India, he said, adding that nearly 700 people worked over the last 3.5 years to make BS VI happen, and "we are ready and we see no technical risk in taking BS VI vehicles to the market from April 1, 2020." All technological challenges that the company was were aware of were negated, he added.
The company has filed over 30 patents in the process of the transition. On the petrol engine, Goenka said, the company has a stamp of approval from both Ford and SsangYong. They have decided to use Mahindra's new petrol engine in their vehicles which means M&M has managed to develop globally competitive engines.
Noting the decline in auto sales, he expected the demand to revive in the next 2-3 months.