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Why Tata Motors is likely to drop small diesel cars from its portfolio

Tata Motors currently sells its entry-level hatchback Tiago with 1-litre diesel engine, compact sedan Tigor with 1.05-litre powertrain and older models like the Bolt and the Zest with a 1.3-litre diesel engine.

twitter-logo PTI        Last Updated: May 5, 2019  | 12:50 IST
Why Tata Motors is likely to drop small diesel cars from its portfolio

Auto major Tata Motors may phase out small diesel cars from its portfolio as demand is expected to slow down due to upcoming BS-VI emission norms that would make such vehicles expensive, according to a senior company official. Already, market leader Maruti Suzuki India (MSI) has stated that it would discontinue diesel models from April 1, 2020, when the BS-VI norms kick in, as it expects the increased cost would put most of the diesel cars, especially the smaller ones, out of reach of small car buyers.

Tata Motors currently sells its entry-level hatchback Tiago with 1-litre diesel engine, compact sedan Tigor with 1.05-litre powertrain and older models like the Bolt and the Zest with a 1.3-litre diesel engine.

"We feel that low demand for entry- and mid-size diesel models will not justify the high costs involved in developing a new small capacity engine," Tata Motors President Passenger Vehicles Business Unit Mayank Pareek said.

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Moreover, around 80 per cent of the demand in the said segment is for petrol variants, and thus, the additional required investment does not seem viable, he added.

The company's other products such as compact SUV Nexon and recently launched SUV Harrier come with bigger 1.5-litre and 2-litre powertrains, respectively and are expected to be upgraded to the next level going ahead. The company sources the 2-litre diesel engine for Harrier from Fiat.

Pareek said the introduction of BS-VI engines will make the compliance expensive, particularly for small diesel cars.

"Given that these high costs will ultimately have to be passed on to the end customer, the sale of diesel vehicles will logically see a decline in the industry," he added.

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With diesel cars set to become costlier from next year after implementation of stricter BS-VI emission norms, major automakers are contemplating about the future of such vehicles in their portfolios. Earlier this month, MSI announced phasing out diesel cars from its portfolio with effect from April 1, 2020, coinciding with the transition of the automobile industry to stricter BS VI emission norms.

On the other hand, Ford has said that it will continue to sell diesel models in the country.

The automaker, which sells models like EcoSport and Endeavour, said it would be ready with BS VI-compliant diesel powertrains for its model range before the April 1, 2020, deadline. The Bharat Stage VI (or BS-VI) emission norm would come into force from April 1, 2020, across the country. Currently, the vehicles sold in the country conform to BS IV emission standards. The Bharat stage emission standards are standards instituted by the government to regulate the output of air pollutants from motor vehicles.

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