Car prices to rise as auto firms gear up with stricter emission norms

NEW DELHI: Passenger and commercial vehicle prices are expected to rise as automobile companies invest in upgrading vehicles to meet stricter emission norms that kick in from April next year.

The Indian automobile industry is currently working to make their products meet the second phase of Bharat Stage VI, equivalent to Euro-VI emission norms, in real time driving conditions.

Four-wheeler passenger and commercial vehicles will need more sophisticated equipment to be added to meet the next level of emission standards.

Industry players expect an increase in the overall production cost, which could be passed on to buyers starting next year.

Vehicles will need to have an on-board self-diagnostic device to monitor the real time driving emission levels. The device will constantly monitor key parts for meeting emission standards such as the catalytic converter and oxygen sensors, to keep a close watch on emissions.

In a scenario wherein the emissions exceed the parameters, the device will indicate through warning lights that the vehicle be submitted for a service.

Additionally, in order to control the level of fuel burnt, the vehicles will also carry programmed fuel injectors, which would control the timing and amount of fuel injected into the petrol engine.

Even the semiconductors used by the vehicle will have to be upgraded to monitor throttle, crankshaft positions, air intake pressure, temperature of the engine and the contents of the emissions from the exhaust (particulate matter, nitrogen oxide, CO2, Sulphur), etc. “The new norms are likely to lead to a marginal increase in the overall vehicle price, with the changes required relatively lower vis-a-vis the previous transition (BS IV to BS VI),” ICRA Vice President & Sector Head, (Corporate Ratings) Rohan Kanwar Gupta noted.

A bulk of the investment would be required towards incorporating the on-board self-diagnostic device, apart from investments towards hardware and software upgradation, he added.

In relation to BS VI Stage I, the investment required, however, is expected to be relatively modest, Gupta said.

He, however, cautioned that as OEMs have been forced to take price hikes to counter inflation over the past 15-18 months, any further increase in the price of the vehicle could have a moderating impact on demand to an extent.