2,000cc diesel vehicle sales ban spreads to Kerala

A traffic jam in New Delhi The worst fear of car makers is becoming a reality as the drive against diesel vehicles spreads outside the national capital region. The National Green Tribunal (NGT) on Monday ordered Kerala government to stop registering diesel vehicles of 2,000cc and above except for public transport and local authority vehicles. The first such ban was imposed in the national capital region by the Supreme Court in December last year and has severely impacted companies like Toyota and Mercedes Benz.

“The state of Kerala shall not register any diesel vehicle with the capacity of 2,000cc and above, except public transport and local authority vehicle,” the order said. Executives of Toyota, Mahindra & Mahindra and Mercedes did not comment on the development. An official of industry body Siam also declined to comment. Toyota and Mercedes have seen their sales in NCR go down after the ban. Mahindra came with a 1,990cc diesel engine for its popular models and was able to bypass the ban.    

The Kochi Circuit Bench of the NGT also barred all ten year old diesel vehicles- light and heavy- from plying on the roads of six cities in the state. Thiruvananthapuram, Kollam, Kochi, Thrissur, Calicut and Kannur are the six cities where ten year old diesel vehicles cannot run after 30 days. “Upon expiry of 30 days from today, if any vehicle is found to be violating this direction, then it would be liable to pay Rs 5,000 per violation, as environmental compensation,” the order said. Funds collected shall be used for improving the environment in these cities.

NGT chairperson Justice Swatanter Kumar who had ordered a ban on sales and registration of all diesel cars in Delhi in December last year was part of the Bench. The state government has also been directed to inform the Tribunal about the availability of compressed natural gas in the entire state to run vehicles.

The NGT order is both negative and positive for the industry. Restriction on ten year old vehicles will generate demand for new purchases and impact transactions in the second hand car market. But the ban on registration of 2,000cc diesel vehicles will create further challenges.

Kerala accounts for about 7 per cent of the total passenger vehicles sold in the country in a year. A total of 191,275 passenger vehicles were sold in Kerala in the year ended march 31, 2015. Of these, only 26,894 were utility vehicles, according to Siam data.

Abdul Majeed, partner with Price Waterhouse said the while banning diesel vehicles above 2,000cc does not improve pollution levels, controlling the population of diesel vehicles seems to be the intention behind such orders. “This will have severe implications on business of car makers. I will not be surprised if more cities/states come under such restrictions in future,” he said.