[sustran] Re: Norms for fuel efficiency to put auto makers under pressure

[Prashanth Bachu]

While the initiative seems good and much awaited, the penalty conditions
come as surprise. Most car companies spend many times more in advertising
daily. It should have been at least of the order of Rs.10,000 per car sold.

Another important thing would be the method of fixing the 2011 benchmark.
Unsure if the policy is for every single vehicle achieving that
fuel-efficiency or if it is the combined fleet sold by the manufacturer.

In any case, it is good that the process has taken off.

*Prashanth Bachu*

*Project Manager - Urban Transport*

*EMBARQ India*
1st Floor, Godrej & Boyce Premises, Gasworks Lane, Lalbaug, Parel, Mumbai
400012

pbachu at embarqindia.org | +91 8305696456

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On 14 February 2014 14:04, Vinay Baindur <yanivbin at gmail.com> wrote:

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> http://www.livemint.com/Industry/XctQqjlxvTagxqh4ZzsD3K/Norms-for-fuel-efficiency-to-put-auto-makers-under-pressure.html
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> *Norms for fuel efficiency to put auto makers under pressure*
> The move, once implemented, is likely to reduce the carbon footprint of the
> automobile industry
>
> Amrit Raj
>
>
> Under the new norms, the industry will have to ensure that the mileage of
> cars on Indian roads improves by 10% by 2021. Photo: Bloomberg
>
>
> New Delhi: In a setback to the automobile industry, already under pressure
> because of declining sales, the government has notified mandatory fuel
> efficiency norms that would push up their production costs.
>
> At the same time, the move, once implemented, is likely to reduce the
> carbon footprint of the automobile industry. It is the first time that such
> norms have been introduced.
>
> Of the more than 80 car models plying on Indian roads at present, only
> around eight comply with these standards.
>
> Under the new norms, the industry will have to ensure that the mileage of
> cars on Indian roads improves by 10% by 2021. The second phase, for which
> the government did not specify a deadline, will begin from 2022 and targets
> a fuel efficiency improvement by 30%.
>
> Failure to comply will invite a penalty. Under the Energy Conservation Act,
> 2001, car makers that fail to meet carbon emission norms will be fined
> Rs.10 lakh initially and asked to pay a penalty of Rs.10,000 a day till
> their car models meet the norms, said Ajay Mathur, director general, Bureau
> of Energy Efficiency (BEE).
>
>
> These norms were finalized by BEE, which functions under India's power
> ministry.
>
> The move couldn't have come at a worse time for the Indian automobile
> industry, which is struggling with a decline in sales in the face of
> slowing economic growth and is on course to post its first sales drop in 10
> years in the 12 months to 31 March. Higher fuel costs and more expensive
> loans have deterred car buyers in Asia's third-largest economy.
>
> The move to enforce stringent fuel-efficiency norms is significant in the
> context of higher oil prices, a weaker rupee and efforts to contain
> pollution in the country. India imports around 80% of its oil requirement
> and spent $144.293 billion on oil imports in the last fiscal year.
> Carbon dioxide emissions by vehicles, after the implementation of the new
> norms, are projected to come down from 142gm per km in 2010-11 to 129.8gm
> by 2021-22 and 113gm 2022 onwards. A report by Yale and Columbia
> universities last month called Delhi the world's most polluted city. Car
> penetration levels in India are only 1/15th those of the US.
> Carbon dioxide emissions by cars is likely to come down by 8.59 % by
> 2021-22 and by 20.42% from 2022 onwards.
>
> This would mean that the car makers will have to make further investments
> in new technologies in order to achieve greater fuel efficiency, which, in
> turn, will have an impact on their profit margins.
>
> Mint reported in September 2012 that the government's plan to enforce
> stricter fuel efficiency norms for cars is likely to increase the cost of
> cars by at least 15%. The industry lobby Society of Indian Automobile
> Manufacturers (Siam) could not confirm the expected increase in cost.
> Mathur of BEE added that since the norms had been notified, the bureau will
> now begin work on a star rating system for vehicles.
>
> As per the original plan, BEE was to give a one-star rating for the least
> fuel efficient vehicles and five stars for the most efficient in their
> respective weight class. Vehicles with a higher star rating are expected to
> be more expensive. BEE had earlier formulated similar standards and star
> labels for electrical appliances such as air conditioners and
> refrigerators.
>
> According to data provided by Siam, car makers have sold at least 29
> million passenger vehicles in India between 1960 and 2013.
>
> A power ministry notification dated 30 January said the new norms are
> applicable on the vehicles "used for the carriage of passengers and their
> luggage and comprising not more than nine seats including driver's seat,
> and of gross vehicle weight not exceeding 3,500kg tested on chassis
> dynamometer (hereinafter referred to as the said motor vehicle) for the
> purpose of manufacturing or importing for sale of the said category of
> motor vehicles".
>
> Chassis dynamometer is a device that measures the amount of power
> translated from the wheels to the racing surface. These energy consumption
> standard are for the motor vehicles using petrol, diesel, liquefied
> petroleum gas (LPG) and compressed natural gas (CNG).
>
> The government has extended the deadline for implementation of the new
> norms by a year. Initially, the first phase was to be launched from 2015,
> and the second from 2020. But a delay in notifying the norms has led to the
> years being pushed to 2016 and 2022, respectively.
>
> Vishnu Mathur, director general of Siam declined to comment. I.V. Rao,
> executive adviser at Maruti Suzuki India Ltd, said car makers need to
> improve the overall performance of their vehicles.
>
> "In order to increase the mileage, the industry needs to reduce the
> friction, increase combustion or reduce the inertia of the vehicle. Better
> fuel efficiency could also be achieved reducing the weight and air
> resistance," Rao said.
>
> The power ministry has derived a formula based on the average fuel
> consumption standard, where the mileage will be decided on the basis of
> litres of fuel consumed by a vehicle to run 100km. In the first phase, the
> government expects the cars to consume 5.49 litres of fuel on average to
> cover 100km by 2016, thus increasing the average mileage to 18.2km per
> litre from 16.5km in 2010-11, when the norms were initially proposed.
>
> In the second phase, the consumption of fuel will come down to 4.77 litres
> for 100km, increasing the mileage to 21km per litre.
> Since fuels such as CNG, LPG and diesel offer better mileage for passenger
> vehicles, the ministry has notified guidelines that make these fuels
> equivalent to the petrol proportionately. The average vehicle weight for
> this class of vehicles for the first phase will be 1,037kg, which will be
> increased to 1,145kg.
>
> On Thursday, the BSE Auto Index of 10 companies was down 0.17% to 11,922.86
> points while the benchmark index Sensex was down 1.25% to 20,193.35 points.
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