JOIN US Customers lining up to buy Bharat State (BS) VI compliant cars from Mahindra and Mahindra (M&M) may have to shell out significantly more. According to the management, the incremental costs could be around Rs 1,50,000.
“Management expects per vehicle cost increase by around Rs 90,000-1,50,000 for the end customer after the incidence of all taxes. As per the management, meeting the timelines is the biggest challenge to meet these 2020 requirements,” brokerage firm Emkay said in a note recently after meeting the management.
The proposed BS VI emission norms are very stringent for diesel vehicles and the company would need to undertake a capex of Rs 500 crore (over the next 4 years) to comply with the new norms and a higher capex outlay would be required from the vendors, Emkay added.
The government had recently announced that it would be enforcing BS VI norms by 2020. The emission norm that are currently in force is BS IV. Auto companies have been stating that they are taking all steps to comply with the new norms. Apart from auto companies, oil companies will also have to ensure availability of BS VI compliant fuel.
The management also stated that it is looking at petrol engines for many of the diesel models including XUV500 and Scorpio.
“To address regulatory challenges witnessed for diesel vehicles, the company has already introduced a 1.9 litre diesel engine for XUV500/ Scorpio; petrol engines on both these models will be introduced within a year and will also be gradually be rolled out to other diesel models,” Emkay said.
M&M will have a total of four petrol engines — 1.2 litre, 1.5 litre, 1.6 litre and 2.2 litre, Emkay said, adding that the management reiterated a negative impact of around 100 basis points on its operating profit margin due to expiration of fiscal benefits at Haridwar plant.