By Deepanshu Taumar & Srinjoy Bal
India’s largest car manufacturer, Maruti Suzuki has shelved its 1.5-litre BS-VI diesel engine, which was expected to power the company's utility vehicle portfolio, three people aware of the development confirmed Mobility Outlook.
The company has lined up as many as five new utility vehicle launches until 2023. The new launches include Vitara Brezza and Made-in-India Jimmy.
One of the sources confirmed anonymity and told Mobility Outlook that the decision to shelving diesel engines had been taken by Suzuki Motor Corporation, citing return on investment issues.
Moreover, rising diesel prices and the company's shifting focus to electrification has led to shelving the diesel 1.5-litre project are the other reasons behind this move.
In FY21, the diesel price rose by INR 18.58 per litre from INR 62.29 on April 1, 2020, to INR 80.87 a litre on March 31, 2021, a growth of 29.83% in Delhi. Moreover, the difference between the price of diesel and petrol has narrowed considerably. At present, the delta is only INR 10 (approximately).
In June, a leading financial daily reported that Maruti Suzuki 1.5 litre will be mounted on MPV XL6, Vitara Brezza, Ertiga and Ciaz as the rivals such as Hyundai Motor India and Tata Motors continue to sell diesel UVs which are gaining momentum in the segment.
Earlier in April 2020, when the BS-VI regulation came into effect, the company discontinued all diesel variants across its model range, as a large number of sales were coming from compact cars and the price realisation of BS-VI technology was high on diesel compact cars. However, the company later confirmed that it is working on a BS-VI 1.5 litre diesel engine.
Industry experts indicate that the rising buzz of electric vehicles and alternate fuels is another reason to shelve a diesel engine. Suzuki Motor Corporation has announced its electrification strategy, which will be reflected in the domestic market too. The company has announced that it will bring strong hybrids and electric vehicles by 2025.
Diesel sales have continued to decline month on month. Post BS-VI implementation, many OEMs were forced to take a hard call on their powertrain portfolio, said Ravi Bhatia, President and Director, Jato Dynamics.
“The decline also reflects Maruti Suzuki’s decision to vacate the diesel powertrain space. With fuel price parity, the relative attractiveness has also dropped,” he added.
Gaurav Vangaal, Associate Director, IHS Market said, the company will lose the major chunk of sales coming from diesel UVs as the consumers still prefer diesel engines in SUVs because of the high mileage, which results in low cost of operations.