Auto sector loses speed as pollution debate takes centrestage

Driving smooth on a slow but steady recovery path, the automotive industry came to a screeching halt as the year 2015 entered its last lap -- thanks to a raging debate on pollution control.

The sector is bracing for further bumps ahead in the new year after a roller-coaster ride in 2015 that also saw a record number of vehicle recalls, an unprecedented emission scandal involving German giant Volkswagen and a ban on high-end diesel vehicles in the national capital region.

The unprecedented rains in Chennai and adjoining areas also led to huge production losses for auto makers and suppliers, who had made that region a major auto hub.

At the same time, the industry saw some new launches including Hyundai Creta, Maruti Suzuki Baleno and Renault Kwid stand out in a market already crowded with numerous models.

Summing up the year 2015, Maruti Suzuki India Chairman R C Bhargava said: "I think the year has been better than the previous year because from 2011-12 to 2013-14 the industry has actually declined by 1 per cent."

He said in 2015-16 the auto industry could see "a growth of maybe a growth of 6 per cent". "So, it does show that there is a turnaround. It's not very big still its a turnaround. It augers well for the future," Bhargava said.

Yet, in a big blow to the auto sector, the Supreme Court banned registration of diesel-run SUVs and cars having engine capacity above 2,000-cc in Delhi and National Capital Region till March 31, 2016 and unveiled a slew of measures to curb the alarming rise in pollution levels in the city.

The move affected all the luxury car makers including, Audi, Mercedes-Benz, BMW, JLR as well as mass market players Mahindra & Mahindra, Tata Motors among others.

The industry players couldn't hide their disappointment but grudgingly accepted the apex court's order.

"So even if we believe the decision on diesel vehicles isn't optimal, we'll honour it and develop vehicles that comply with their stipulations," Mahindra Group Chairman Anand Mahindra said.

Auto industry body SIAM called for a holistic approach to solve the issue of air pollution in Delhi. Citing an IIT study it said cars polluted very less as compared to other factors like dust and burning of paddy fields in neighbouring states.

"There are various sources of pollution which can be measured using a scientific source apportionment study. To improve air quality from vehicle point of view we must take a comprehensive view of various factors causing pollution," Toyota Kirloskar Motor Vice-Chairman Vikram Kirloskar said.

Delhi and Mumbai are India's largest markets for luxury vehicles. According to industry estimates, Delhi accounts for about 20 per cent of total luxury vehicle sales in India.

The Supreme Court order followed an order of the National Green Tribunal, which had banned registration of all diesel vehicles in Delhi till January 6. The decision ignited calls from the auto companies for a clear policy on fuel and remove uncertainty.

"The one thing industry likes, and all industry likes, is certainty. Irrespective of what it is you want to be certain of what is going to happen. Where you get into uncertainty, and whimsical action and changes then it becomes very difficult for any industry. Industry needs a stable certain environment," Bhargava said.