[Mission_PGPX]

Originally Posted by alpha1

1.
2. Cost of manufacturing of Euro spec diesel* will always turn out to be more expensive. When you refine crude, it is the heavier fractions that retain most of the sulfur. Therefore you need to invest heavily in terms of refining processes to tame down this sulfur. It is not just the sulfur reduction units (hydrotreaters) that needs to be set up but also the allied units like hydrogen generation, sulfur recovery etc.
l.

you seem to be coming from a chemical engineering background Alpha1. Yes you are correct that its not only the addition of hydrotreaters but revamp/addition of existing units like HGU and SRU. Its nice and proud feeling to see such stuff mentioned in forums.

BTW, i myself handle sulfur portfolio at my organization and this BS4 and 5 change means business for me...

[alpha1]

Originally Posted by Mission_PGPX

you seem to be coming from a chemical engineering background Alpha1. Yes you are correct that its not only the addition of hydrotreaters but revamp/addition of existing units like HGU and SRU. Its nice and proud feeling to see such stuff mentioned in forums.

BTW, i myself handle sulfur portfolio at my organization and this BS4 and 5 change means business for me...

Yes, and I have also worked in refinery for some time.
And also been part of E3/E4/E5 projects from seller's point of view (perhaps you may be my buyer )

[saleem_k]

Not sure if this has been discussed on earlier pages but the breakup between diesel and petrol should be as per the segment as well. Primarily the vehicle sales in the lower segments (Alto, Wagon R, i10, swift, etc.) are comparatively higher than the segments priced above Rs.8 lakhs. If more cars from lower segments are sold then obviously there will be more petrol cars since people from these segments don't really bother about torque, bhps or all that. For many it's a dream to own a car no matter what kind of an engine it has as long as it is from a reliable brand. There is a mindset that diesel is good for bulkier vehicles. I think the 37% of diesel cars is mostly dominated by products that don't offer a significant petrol option such as Duster/Terrano, Innova, Scorpio, Bolero, XUV500, etc.

So it may not be entirely right to blame diesel for this change in trend.

It could also be the case that people who wanted more features in their cars are now finding them in lower segment cars and don't really feel the need to buy higher segment cars to fulfil their craving for those erstwhile elusive features in cars from the lower segment. Similarly with the rise in nuclear families and crowded cities people probably prefer smaller cars now and don't really have a need for a proper 7-seater SUV (probably explains the emergence of mini-suv segment).

I know swift, Dzire, i20 also offer diesel options but the majority mango people wouldn't really care about the punchy engine or the torque features provided by these engines and would prefer a car in their stable just to be a car owner and use it as a family chariot for those occasional social gatherings and quick roadtrips.

Just my two cents!

[srinih75]

I was always inquisitive on how ICEs operate and how the efficiencies are engineered. The engines today have evolved multifold when compared to the initial model T or similar first production diesel engines. Here is a link I found having lot of technical details. I am still going through all the posts.
http://forums.anandtech.com/showthread.php?t=198458

The recent fiasco of VW getting into trouble on clean diesel engines say how tough its to balance a clean diesel vs cost vs performance.

The debate on petrol vs diesel, LPG vs CNG, Hybrid vs EVs is something I closely watch.

Found this link on HSD and I am pretty happy that we are using good rated fuel in Bangalore, surely all cities which have been moved to comply on BS 4 norms are on this trend. So guess are good to assume we aren't that polluting.

http://www.mrpl.co.in/product-hsd

[RavenAvi]

Car makers plying in the Indian market are re-adjusting their strategies, production plans and their component supply chains as they struggle to come to grip with the ever-changing environment regarding demand from their car customers, as petrol power is rapidly becoming the more preferred option over oil burners.

But even the best of re-aligned strategies can take a minimum of three to four months for implementation - a period which can be really tough to negotiate, as companies struggle to meet petrol-car demands even as they sit on huge piles of unsold diesel-car inventories.

When the new BS-VI emission norms were advanced in January 2016 by the Government to be implemented by April 2020 (skipping BS-V norms altogether), car manufacturers now had to revamp their earlier product development plans and plan to achieve their fiscal targets in a much smaller time frame.

Now, with the Delhi-NCR ban on registration of 2,000cc+ diesels followed by the Kerala-ban for the same coming within months of each other, car companies have been hit hard and are struggling badly to adjust to this rapidly changing behaviour of the Indian auto sector.

More than the bans themselves, it's the apprehension of the Indian customer regarding diesel cars in general which has affected the demand-supply chain of most car companies in the Indian market.

Moreover, with the Supreme Court mentioning that it's considering a 30% cess on diesel cars above 2,000cc, diesel car sales could tumble down to really low levels in the days to come.

Take the case of Honda. It has seen a drastic shift in the petrol/diesel mix for the City in the last quarter as compared to Q4 of 2015. While four of every ten buyers opted for the diesel variant in Q4 of last calendar year, it came down to less than three of ten new purchases in January-March. Sale of the City has declined as a result.

"On the one hand you have petrol vehicle buyers waiting and on the other, you sit on unsold diesel vehicles. We have seen a swing of 15 per cent to petrol variants (from diesel) in the case of (the) City during the first quarter of 2016. The situation is uncertain," Jnaneswar Sen, senior vice-president (marketing and sales) at Honda Cars India, said recently.

Even though many companies, including Honda, have the flexibility to switch between diesel and petrol models, adjusting the production and component supply chain to meet this change takes a minimum of three to four months. Abrupt changes in demand pattern upset their production planning and results in sales loss. The challenge is not just limited to car makers - the component industry is also coming under stress, having to adjust to frequent changes in production plans by manufacturers.

Experts say the uncertain atmosphere has made India less attractive as an investment destination. "Sudden decisions create instability and question the validity of India as far as major investment decisions are concerned. This is not in the interest of India's citizens. Also, to fight air pollution and the problems that it causes for citizens, we need to look at the problem holistically," says Wilfried Aulbur, the managing partner of consulting firm Roland Berger, India. Aulbur, who used to head Mercedes in India, says the automotive industry has to do its part but one also needs to look at other factors contributing to air pollution.

"We consider a 30 per cent cess the same as a diesel ban. Considering the limited financial benefit that you get due to the price differential between the two fuels, some of the cars need to run for 10 years to recover the extra investment. If you add another 30 per cent to the price, why would anyone in the world buy (a) diesel (vehicle) anymore?" says Roland Folder, managing director and chief executive officer of Mercedes Benz India.

Toyota, which currently imports diesel engines for its India-made cars, is considering investments of Rs 1,100 crore to set up a diesel engine plant. N Raja, senior vice-president (sales and marketing) of the company, says the decision "demonstrates our strong belief that diesel is a good fuel when used with the latest technology. Diesel engine technology will continue to be an integral part of every automobile maker, considering the stringent fuel efficiency norms being introduced in year 2017."

Business Standard

[alpha1]

Well the lesser taxes and duties on diesel (I call it persisting subsidy) meant to lower the prices has been the Govt's policy to "help" the public transport and goods carriers.

That SC is asking for a 30% additional tax is BUT natural and a looooong overdue task. The number (30%) can be debatable - but essentially what is lost in terms of ED/CST/VAT on diesel SHOULD be recovered from the private buyers in some other way. Additional Tax on private diesel vehicle balances the market.

[RavenAvi]

The big question hanging over the entire automotive industry today - What is the future of diesel in India? - has led to a sudden "halt, wait & watch" mode for almost Rs 50,000 crores worth of investments, both invested & planned!

This problem is not limited to Toyota Kirloskar Motor or Mercedes-Benz India anymore.

Sample this: around Rs 10,000 crore to Rs 15,000 crore or $1.5-2.4 billion of planned fresh investments in new diesel engines and plant capacities are now put on hold, as is an equal amount (to the above) of investments from vendors and suppliers.

Combine the uncertainty of diesel productions and their (possible) bans across other states/cities, with the stricter BS-VI emission norms due to kick in by 2020, and auto companies now find themselves in a complete no man's land considering future planning and long-term clarity on diesels and their future in India.

On the one hand, the industry lacks clarity on the future of diesel. Will these bans stay? Will other states too ban diesel vehicles? These doubts impact their plans to invest in diesel facilities. But they also have to meet BS VI emission norms in four years.

Plus there is a challenge of meeting the new CAFE norms, which mandates a double digit improvement in fuel economy, which would be impossible to meet without the diesel vehicles. The industry is itching to begin work, but can't for lack of long term clarity.

"If people investing totally in accordance to the government's rules and regulations are not allowed to sell, what can you do? If a company like Toyota or Mercedes Benz says we have lost confidence, and then it also makes other MNCs question their future investment," says R C Bhargava, chairman of Maruti Suzuki.

The bans on diesel vehicle is not the only challenge. The industry is also racing to meet newer, stricter emission norms. This January the government decided to advance the BS VI emission norms to 2020. It took Europe and other developed markets 10 years to upgrade to Euro VI or BS VI emission norms; India has to do it in four years.

Safety is another key aspect, which may turn out to be a massive challenge. According to the diesel engine maker Bosch, a lead time of four years is required to transition from BS IV to BS V and another four years to BS VI. If these are not followed in required phases, it could lead to severe safety and quality problems.

Cost is also worrying the industry. Since timelines are so short industry players fear the automakers may not be able to do optimum engineering of products, which affects costs.

Still, the industry is hopeful. "I am sure all of us will be able to meet the timelines of 2020, but we will have to rely largely on imports, which will have an impact on the cost," says Pawan Goenka, ED of Mahindra & Mahindra. He is hopeful of diesel's future in India.

While diesel ban seemed like a low hanging fruit, the IIT Kanpur study revealed that automobiles contributed just 20% of Delhi's emission problem and that too was largely by older vehicles. The new passenger vehicle contributed less than 2%, BS VI diesel vehicles plying in Delhi just 0.5% and above 2 litre a miniscule 0.13%.

ET