Maruti to phase out all diesel cars from April next year
- Maruti Suzuki garners nearly 23% of its annual sales from diesel cars
- The carmaker also today announced a hike in prices of some of its models
Maruti Suzuki, the country’s largest vehicle manufacturer, today announced that it will stop manufacturing diesel vehicles from April 1, 2020, when the new BS 6 emission norms will be introduced. The high cost of upgrading existing diesel engines to the BS 6 norms propelled the company to take such a decision.
The company will try to focus on compressed natural gas (CNG) and hybrid technology is driven vehicles to compensate for the vacuum created by the phasing-out of diesel vehicles.
Mint was the first to report on Feb 14, 2019, that Maruti was in talks with its parent company Suzuki Motor Corporation for discontinuation of diesel vehicles from 2020.
According to R C Bhargava, chairman, Maruti Suzuki India Ltd, from April next year the company will stop manufacturing diesel vehicles since substantially higher development cost will not make diesel a viable option for consumers.
“We have taken this decision so that in 2022 we are able to meet the Corporate Average Fuel Efficiency norms and a higher share of CNG vehicles will help us comply with the norms. I hope the union government’s policies will help grow the market for CNG vehicles,” added Bhargava.
Apart from that, the company reported a 4.6% year-on-year decline in net profit to ₹1,795 crore for the quarter ending March 31, 2018, as a result of high commodity and forex costs and increased discounts offered by the company to attract buyers since vehicle sales remain subdued.
The total vehicle sales of the company increased by just 0.4% year-on-year to 4,28,863 units while the net sales or revenue dropped by 0.7% year on year to 20,737.5 crores. The operating margins contracted by 300 basis points due to increases in commodity cost and discounts.
In the full year FY 19, the New Delhi-based company reported a 2.9% decrease in net profit to ₹7,500.6 crore while the revenues grew by just 6.3% to ₹8,3026.5 crore.
According to Ajay Seth, Maruti’s executive director, Finance, overall increased discounts offered to customers and commodity costs had an adverse impact on the financials of the company in FY 19 and the company will cut costs in a different part of its operations to stabilise the operating margins in FY 2020.
(This story originally appeared on Livemint)