Friday, 9 March 2018


Mileage labels on cars soon, new benchmarks in 2015

After more than four years of wrangling, the government has cleared fuel mileage standards and labeling for new cars.

NEW DELHI: After more than four years of wrangling, the government has cleared fuel mileage standards and labeling for new cars. The norms, to be implemented soon, will force automobile manufacturers to put government certified fuel efficiency labels on each car they sell and improve efficiency ofthe cars they sell every year.

While the labels will become mandatory soon, the standards will kick in by 2015, giving manufacturers time to improve the technology under the bonnet to meet the standards. The labels will certify the fuel efficiency of the car model under standard conditions and where it stands in comparison to other cars in the same category.

At the moment, the top ten manufacturers with combined sales of over 96% of the market have an average fuel efficiency of 16.42 km per litre. By 2015, this will be improved to 18.15 km per litre and by 2020, this will have to be ratcheted up to 20.79 km per litre on average.

Keeping consumer interest in mind, the government has also kept the standards low enough to ensure that any extra cost paid for the improved technology can be recouped from better mileage over 2-3 years even after the tougher norms kick in by 2020.

After 2015, manufacturers will not be allowed to sell models that fall below the government's 'one star' rating forcing the companies to produce better cars. The way the standards are defined the companies would have to ensure that they sell enough efficient cars that they meet the corporate fleet average standard set by the government for 2015 and then for 2020.

The proposal for such standards had been opposed by the car manufacturers on several grounds - ranging from bad road conditions, congestion to bad fuel quality and their association SIAM had asked for diluting the norms. But the government in its analysis noted that the these objections are not valid considering the targets set with the industry improving efficiency at 2.8% every year on its own and being asked to do less in the first three years than this. The government also noted that with Bharat IV fuel standards coming in all over the country, the issue of fuel quality was not linked to the standards.

The standards would bring Indian cars and technology at par with the European market by 2020, the government said.

The biggest challenge in the first three years would be for manufacturers of heavy and luxury cars who will have to improve considerably to reach the 2015 standards. To match the 2020 standards, all manufacturers will need to make a substantial change to the engines or models to meet the norms. The standards are set in a fashion that will also ensure that the models coming on to the roads do not get overly heavy as that generally leads to increased fuel consumption.

Documents prepared by the government show that manufacturers like Diamler AG, Mahindra & Mahindra, BMW, Nissan, Audi, Toyota, Hindustan Motors and Volkswagen would have to do a lot to bring their variants and models to conformity by 2015. To catch up with the 2020 standards, almost all manufacturers would need to upgrade technologies and even the small and medium car manufacturers such as Maruti Suzuki and Hyundai Motors would need to bring in technological improvements. The challenge for all would be to sell higher number of efficient cars if they want to continue to sell the low mileage models which usually cater to the high-end customer.

Violation of the norms by auto manufacturers would lead to penalty up to Rs 10 lakh and a further penalty of Rs 10,000 for each subsequent day of non-compliance with an upper cap of Rs 46 lakh. Cars that do not conform to the labels put on them could also be ordered withdrawn from the market by the government.

The government believes this may not be enough to enforce compliance and the Energy Conservation Act under which the standards and labeling will be imposed might need to be made more severe but that would require taking the parliamentary route to amend the law.

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