Truck makers can finally breathe easy with sales back on track and business looking positive.
The other big break coming their way is, ironically, from clean air regulations which will push sales of Bharat Stage III truck strongly through 2016-17. With BS IV coming into force from April 1, 2017 fleet operators would rather invest in a less expensive BS III truck.
The not-so-good news comes from BS VI emission norms which will be implemented across the country from April 2020. In the process, auto companies will have barely 1,000 days to transit directly from BS IV to VI. They would also need to spend substantially on technology and pass these on to the customer.
How this will impact a price-sensitive business like commercial vehicles remains to be seen. Will fleet operators be ready to pay a lot more for a BS VI truck and or will they go in for frenzied buying of BS IV options instead in 2019-20? “The challenge will be to get ready for BS VI and I, along with other manufacturers, do not have a clue on where we will be placed at that point in time,” admits Ravindra Pisharody, Executive Director (Commercial Vehicles), Tata Motors.
From his company’s point of view, this is a requirement by the country and judiciary which means there is really no option but to comply. However, truck makers are seeking some clarifications on this critical transition. “One of these is that while new models should be BS VI-compliant in 2020, existing vehicles should be allowed to be phased out over one or two years. This is being done in European countries also,” says Pisharody.
Vinod Dasari, Managing Director of Ashok Leyland, concedes that this is going to be quite a rapid marathon. “Commercial vehicles in Europe went from Euro 4 to 5 in five years and thereon to Euro 6 in six years. We are going to do it in three years and this applies to everyone,” he says.
Leyland had displayed its Euro 6 truck at the recently held Auto Expo, a clear message that it is ready for the 2020 challenge. Yet, there is a lot of hard work ahead for the industry coupled with apprehension of sales taking a hit in a high cost regime.
Testing timesAccording to Tata’s Pisharody, the other big challenge pertains to full validation and testing which should be done on BS VI fuel. His fears are not completely unfounded given India’s track record in the recent past. Even today, BS IV is finally going to be supplied a good seven years after its original timetable.
This time around, the Petroleum Ministry has assured timely fuel supplies and oil companies have also gone on record to reiterate that they will be up to the task. The investments required would be in the region of ₹30,000 crore though the bigger challenge for these companies is to plan the gradual phase-out of BS IV fuel from their outlets and get BS VI on time.
This is not the easiest of tasks and will require careful coordination right from crude supplies, refinery schedules, supplies through pipelines and trucks and eventually making the fuel available at retail outlets. And even though BS VI should be made available in April 2020, customers want supplies assured earlier.
Truck makers have had detailed discussions with the nodal body, SIAM (Society of Indian Automobile Manufacturers) and key ancillary supplier, Bosch. According to Pisharody, all these talks are converging to the position that BS VI must be available in large parts of the country about a year in advance.
“This is because the validation and testing are critical. If there is any doubt on that, we would like a gradual phase-out to be considered,” he says. On the issue of costs, Pisharody says it is way too early to make an estimate at this point in time. He cautions that fleet operators will need to be ready for a high cost regime.
Leyland’s Dasari reiterates that there is really no way out. “Costs will go up and be passed on as clean air does not come in free. The challenge is to apply Indian creative innovation in this technology. This is the only way to bite the bullet,” he says.