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Mahindra works on petrol engines after diesel ban in capital

Mahindra & Mahindra Ltd, India’s largest sports utility vehicle (SUV) manufacturer, has started developing petrol engines for its existing models after the Supreme Court banned, albeit temporarily, the sale of large diesel cars in Delhi to combat the smog that is smothering the national capital, agencies reported.

Mahindra is hit the most by the ban because it only has diesel cars in its range, several with engines of more than 2 litre capacity that cannot be sold in Delhi until March 31, 2016.

"We are looking at options ... we will have a petrol option available in most of our vehicles in the medium term," M&M executive director Pawan Goenka told reporters on Friday.

Dealers selling cars made by Mahindra and rivals such as Toyota are now saddled with hundreds of unsold vehicles that will need to be moved to dealers elsewhere in the country or returned to the manufacturers.

Mahindra dealers in Delhi and the surrounding National Capital Region, where the ban is applicable, have more than 1,000 unsold cars, Goenka said. The automaker makes about 2 per cent of total sales in the area.

On Friday, Mahindra unveiled its first petrol engine, developed at a total cost of Rs500 crore ($75.4 million), for its new compact SUV, KUV100, that will be launched in January. It is now working on petrol engines for its bigger vehicles, including the Scorpio and the XUV500.

There is an upside for the company, however. The ban gives it an opportunity to push the sales of its electric cars. Mahindra sells three electric cars in India and has three more in the pipeline but would like more government incentives so it can reduce the price of the cars and spur demand, said Goenka.

"We have to look at the long-term view that the court will take," he said.