Bharat Stage VI emission norms: Two-wheeler prices to up

CHENNAI: The move to implement Bharat Stage VI emission norms by 2020 will affect two and three-wheeler buyers too, and not just SUV fans. According to a report by rating agency ICRA, prices of scooters and motorcycles will go up by Rs 5,000-6,000 when the emission landscape migrates to BS6.
At present, two & three wheelers in India follow BS-III emission norms, which are expected to move to BS-IV by April 2017.The government has proposed that even two & three wheelers will also move to BS-VI by April 2020.
“While there won’t be significant changes in engine or after treatment systems to meet BS-IV norms, for BS-VI standards, the industry will have to adopt Electronic Fuel Injection (EFI) system and also tweak the exhaust system. Collectively, these changes will increase cost of two- wheelers by approximately Rs 5,000-6,000 (or 10% for mid-size motorcycle),” said Subrata Ray, senior group VP, ICRA ratings.
The cost of petrol passenger vehicles may increase by Rs 20,000-30,000 per vehicle, while the increase for diesel passenger vehicles could be in the range of Rs 75,000-100,000 per vehicle. For M&HCVs, the cost differential is expected to be upwards of Rs 100,000-150,000 (or 10% of current vehicle cost).
The Government of India, in February 2016, decided to leapfrog the Bharat Stage (BS)-V Emission Standards and directly move to more stringent BS-VI norms by April 2020, four years ahead of the earlier schedule.
“While availability of technology is not an issue, the key challenge for OEMs will be adapting the available solutions to Indian market conditions in a relatively short time frame, in a cost-effective manner,” said Ray.
“Further, given the past experience with respect to delays in availability of BS-IV compliant fuel, the availability of cleaner fuel by 2020 on nationwide basis may also become a bottleneck.”
The migration to BS6 would also alter the petrol-diesel mix in the four wheeler industry, said the report. “OEMs with higher dependence on diesel models may accelerate their focus on petrol segment, while hybrids and other clean technologies would take centre stage in their R&D plans,” said Ray.
“Overall, the proposed emission standards will push vehicle prices upwards with diesel segment likely to witness sizeable cost increase due to introduction additional components. This would make diesel passenger vehicles costlier (vis-à-vis petrol variants) and consequently may deter demand for diesel vehicles,” he added.
In comparison to existing emission standards, the proposed BS6 norms incorporate substantial tightening of NOx and particulate matter and also implement a limit on particle number. Further, the emission standards are incrementally far more stringent for diesel vehicles as compared to petrol variants.
“As diesel vehicles will require significant technology changes, the cost differential between petrol and diesel passenger vehicles are likely to expand further. This will widen the payback period for diesel vehicles. This apart, the narrowing price gap between petrol & diesel, recent ban on registration of diesel vehicles in the national capital region, along with potential risk of restricting diesel-powered taxis could have significant implications for diesel investments by OEMs. We expect OEMs with higher dependence on diesel models (especially in the Utility Vehicle segment) to reduce their exposure on diesel and accelerate investments in the petrol segment,” said Ray.