Dr. Aulbur feels a long-term, stable framework is needed to tackle diesel emissions.
The current ban on diesel vehicles over 2,000cc in Delhi, and now in Kerala, has created an uncertain environment for auto manufacturers. Potential car buyers have put their plans to buy diesel vehicles on hold, or shifted to petrol, as there’s a fear that the ban may slowly expand to other parts of India as well. This is clear from the changing fuel mix of passenger vehicles – with diesel accounting for a 58% share in FY13, versus 44% in FY16 (April – February).
These decisions have created an uncertain environment for car manufacturers and dealers, where they’re faced with a situation of waiting lists for petrol vehicles while sitting on unsold diesel inventory. Several OEMs today have focused on developing dual-purpose engine production lines, which allow flexibility to produce both diesel and petrol engines according to demand. Adjusting the production and supply chain to meet the new unforeseen changes in demand however takes time. Further, sudden changes to production planning by OEMs cause significant issues for smaller auto-component companies, who also have to adapt and change their plans without adequate warning.
This has also severely impacted the current investments and future expansion plans of several domestic and multinational auto companies. As per press reports, Toyota is questioning the motivation for investments to launch new models in India while Mercedes-Benz has mentioned that this ruling creates an environment of uncertainty and will severely impact their expansion plans. As per SIAM, the diesel ban in Delhi has already cost about 5,000 jobs in addition to production losses and the situation will only worsen further with the ban in Kerala.
The focus of government should be to provide a long-term, stable framework for emissions and encourage auto companies to invest in R&D and come out with solutions. Ad hoc measures have a major impact on demand and negatively affect companies who have invested heavily. Sudden decisions create instability and impact the overall investment climate of the country and question the viability of future investments.
Courts and governments can, and should, determine emission norms and ensure adherence to the same. Focus should, however, be on emission reduction and not on technology employed. The decision on appropriate technologies to be used to achieve these norms should rest with engineers and OEMs. Diesel engine technology will continue to be an integral part of every OEM’s portfolio, considering the stringent efficiency norms being introduced. CAFE (Corporate Average Fuel Economy) norms mandate a double-digit improvement in fuel economy, which would not be possible without diesel engines.
The actions of the Supreme Court and the National Green Tribunal are well-intentioned, and there’s no doubt that the quality of air needs to improve. However, to effectively fight air pollution, and the problems that it causes for citizens, we need to look at the problem holistically. Clearly, the automotive industry cannot be exempted from doing its share and has to contribute significantly. But, equally, we also need to look at the impact of other industries responsible for increasing pollution in cities – the burning of plastic or organic matter, the increased emission levels by vehicles that are more than 10 years old (irrespective of diesel or petrol), etc.
Our goal is to live in healthy cities. This goal will not be achieved by banning new diesel vehicles in cities, but only by a systematic, fact-based fight against all sources of air pollution.
Dr. Aulbur is a veteran of the automotive industry. He heads the automotive practice in Asia for Roland Berger, and was formerly MD & CEO of Mercedes-Benz India.