Mahindra and Mahindra to launch BS VI compliant vehicles soon; invests Rs 1,000 cr for fuel transition

Mumbai: Homegrown auto major Mahindra and Mahindra on Monday said 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. “We will be ready with our first gasoline BS VI ready vehicles by the end of the second quarter of this year,” M&M Managing Director Pawan Goenka told reporters here. “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,” Goenka said. The Bharat Stage VI (or BS-VI) emission norms would come into force from 1 April, 2020 across the country. Currently, the vehicles sold in the country conform to BS-IV emission standards. “The only entrant we are not taking to BS-VI is the 1.2 diesel. Which means the only passenger vehicle which 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 very high cost of meeting the emission requirement,” he added. [caption id=“attachment_4330577” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] However, he said, even on the 1.2 litre, the company has done all the initial work. If somehow it is found that there is a pull for 1.2 diesel, that work can be done in a year and a half. The company has invested Rs 1,000 crore for the 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 vehicle 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. He said 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 31 March, 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 31 March, 2020 is scrap. “Therefore we have to take a 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, he said 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 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 3.5 years have perhaps been the most challenging years for any product development and sourcing organization in auto industry in India, he said, adding that nearly 700 people worked over the last 3.5 years to make BS VI happen. “We are ready and we see no technical risk in taking BS VI vehicles to the market from 1 April, 2020. We are ready because we got an early start, plan, front loading and work with key suppliers,” Goenka said. 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.