The prices of diesel passenger vehicles (PVs) will increase substantially in view of upcoming new emission standards, according to rating agency Icra.

The proposed new emission standards that will come into force by April 2020 will push vehicle prices upwards with diesel segment likely to witness sizeable cost increase due to introduction of additional components, it said.

Since the cost implications will be higher in making the diesel cars BS-VI compliant, the price of diesel passenger vehicle is likely to increase ₹ 75,000-₹100,000 per vehicle, while the increase for petrol PVs could be in the range of ₹ 20,000-30,000 per vehicle.

As diesel vehicles will undergo significant technology changes, the cost differential between petrol and diesel PVs may also expand further. The price gap between diesel and petrol vehicle is expected to increase from ₹1 lakh to ₹1.5 lakh. With widening payback period for diesel vehicles, there will be a severe impact on demand for diesel cars, which are already on a declining trend since FY15 due to the narrowing price gap between the two fuels and recent ban on registration of diesel vehicles (with engine capacity of 2,000 cc and above) in the NCR. With proposed BS-VI emission standards being incrementally more stringent for diesel vehicles vis-à-vis petrol vehicles, the technology for former is likely to undergo significant upgradation both within the engine as well as the exhaust system.

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