The Indian car market was on the verge of receiving a shock when the news of Union Minister Nitin Gadkari’s proposed plan to increase the goods and service tax (GST) on diesel cars by 10 percent went viral. However, Gadkari negated the proposal and retracted his statement within a few hours. While the Indian Government aims to reduce the use and sales of diesel cars in the near future, a top official at Tata Motors has issued a strong statement, affirming that the company will continue to manufacture diesel cars as long as there are customers willing to buy them.
In one of his recent statements, Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles and Electric Mobility, stated that Tata Motors will persist in manufacturing and selling diesel cars as long as there is demand in the market. Chandra believes that there is still significant demand for diesel cars, particularly in the premium SUV segment. However, this demand may diminish following the enforcement of BS-VII emission norms, which will make diesel engines, and consequently diesel cars, more expensive.
There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net…
— Nitin Gadkari (@nitin_gadkari) September 12, 2023
Shailesh Chandra added in his statement that sales of diesel vehicles have consistently declined in the passenger vehicle category, now accounting for only 12-15 percent. This decline in demand for diesel cars can be attributed to the increased costs associated with meeting updated emission norms, making diesel cars more expensive than ever before.
Many customers choose diesel option
Another reason for the uncertainty surrounding diesel cars in the future is deterring prospective car buyers from choosing them. However, in the premium compact and midsize SUV categories, many customers still prioritize diesel engines over petrol and electric due to their extensive monthly usage. For such customers, Tata Motors will continue to manufacture diesel SUVs while strongly committing to the goal of reducing emissions.
Tata Motors currently offers four diesel-powered models – Altroz, Nexon, Harrier, and Safari. Among these, the Altroz is the sole hatchback available in India with a diesel engine option. All other small car manufacturers – Maruti Suzuki, Hyundai, Honda, Renault, Nissan, and Volkswagen – have ceased offering diesel-powered hatchbacks. The Nexon is one of the few compact SUVs in its category that offers diesel variants, along with the Hyundai Venue, Kia Sonet, and Mahindra XUV300.
Following these are the flagship offerings – the Harrier and Safari SUVs – exclusively available with the Fiat-sourced 2.0-litre diesel engine. This four-cylinder oil burner is expected to remain the primary choice of powertrain even in the heavily updated versions of these two SUVs, in addition to the speculated option of a 1.5-litre four-cylinder turbocharged petrol engine.