New Delhi, April 26 : The country’s largest carmaker Maruti-Suzuki today clearly announced that they will stop sales of all diesel-engined cars from April 1, 2020. This is the day that Bharat Stage 6 (BS6) emission norms come into force in India and no old Bharat Stage 4 diesel engined vehicles will be allowed to be registered. During the carmakers annual results conference, Chairman R C Bhargava made this unequivocal statement about diesels and announced that this would apply to all Maruti-Suzuki products includings hatchbacks, sedans, SUV’s and commercial vehicles. Bhargava said that this was because making existing diesel engines BS6 compatible was not technically possible and new engines and costs for a BS6 diesel option on smaller cars would add at least Rs 1 lakh to the existing cost of a diesel car. He felt that alongside factors such as higher cost and the fact that diesel vehicles will be deregistered in the National capital Region within ten years, a plan which might be implemented nationwide and with diesel prices rising, the demand for diesel vehicles would collapse. “The Supreme Court has made it clear that it will not allow the sale and registration of any BS4 from April 1, 2020”, Bhargava said explaining this decision.
This had a negative impact on the Maruti’s share price which crashed after this announcement after having climbed earlier after the company beat investor expectations with a relatively positive result. This is because 23 percent of Maruti’s sales are of diesel vehicles, almost all are of the 1.3 litre diesel engine that Maruti licenses from Fiat, and the company recently announced a new 1.5 litre diesel engine for the Ciaz sedan.
Bhargava however said that the company continued to work on hybrid vehicles and while no ‘strong hybrids’ will be launched in the coming year, Maruti-Suzuki continues to work on the technology for a potential future launch. Bhargava expressed negativity on the possibility of more electric vehicles being launched in the small car space given costs and without a comprehensive study on commodities and carbon costs.
Unit sales for the year climbed to 1,862,449 units including exports, a growth of 4.7 per cent and thus net sales stood at Rs 83,026.5 crore a growth of 6.3 per cent. However with foreign exchange volatility and rising commodity prices, net profit declined 2.9 per cent to Rs 7500 crore, and thus the company only declared a dividend of Rs 80 per share. One other reason for declining profitability were the increase in customer discounts which rose from Rs 15,849 per vehicle on average in 2017-18 to Rs 18,277 per vehicle in 2018-19. The company also said that while the last few quarters have been weak, sales in the fourth quarter declining 0.7 per cent over the previous year this was in line with most pre-election years in India. That said, Maruti-Suzuki expected sales to grow between 4-8 per cent in Fiscal Year 2020.
