Automobile major Mahindra & Mahindra (M&M) has had a challenging year so far, especially due to the temporary ban on diesel vehicles (2,000-cc and above) in the national capital region (NCR). The company is revisiting its future growth strategy to tide over the challenges. Pawan Goenka, its executive director, tells Ajay Modi that petrol vehicles will be an important focus area and the company is ready to bring in smaller engines if larger engines are perceived to be more polluting.
How easy was it to develop a 1.99-litre diesel engine and bring it to comply with the ban imposed by Supreme Court?
The 1.99-litre engine was a happy coincidence for us. It is not that we started developing the engine because of the Supreme Court ban. The engine was on the drawing board for a year and half and we were working on it. It so happened that the development happened around the same time when the Supreme Court ban came and we were able to use it. The development was not being done specifically for the Indian market, but it was for global markets. Yes, we were able to bring that for India and prepone it.
Will that be used nationally or only for the Delhi NCR region?
Right now we have it launched only for NCR. We will wait to see how the customers respond to it. If they are happy with its efficiency and are indifferent to the engine size we will make it common. We will align to the response. The current legal requirement forces us to sell it only in NCR, but if customers want 1.99 litre everywhere, we will do it. Only few parts need to be changed to make a 1.99 litre engine. It is not a big deal.
Considering the recent events, will you rate the current year as one of the most challenging ones for Mahindra in recent times?
Businesses are always challenging. There is no time when I can say that I am going to just sleep, relax and have nothing to do. There is always some challenge or the other. We only keep forgetting past challenges when there is a new one.
At the same time, I don’t want to undermine the challenges that are in front of us now because they are coming from various fronts — regulatory, legal, competitive, safety — in the auto business. Tractor business too is faced with challenges due to slowdown in rural market. In two-wheelers, we are struggling to ramp up to the volumes we want.
The electric vehicle has not reached a level we would want it to. So, there are multiple challenges. Mahindra will tackle each of these. The two things that we have done in last one month: launch of the KUV100 and 1.99 diesel engine — shows that we will be able to take care of the challenges that come our way.
Have these challenges necessitated a relook at your plans and strategies?
Definitely. One thing that definitely happens with these changes is that we are looking at the petrol portfolio more seriously. Not that we had not planned on petrol. It was always in the works and that is how the petrol KUV 100 came. But we will probably do it in more vehicles now than we would have done otherwise. What is yet to be seen is how our customers react to petrol offering in SUV. Smaller vehicle like KUV100 will have a good mix of petrol and diesel. But for the larger ones like XUV500, whether the customer accepts it is yet to be seen. In the past, many manufacturers have had petrol variants in SUVs, but petrol was never preferred. We will be looking at petrol more seriously that we would have otherwise.
The second change is electric vehicles. They are becoming more relevant than we thought. FAME scheme has given some push. We expect electric to become more mainstream.
The third change is that BSVI norms that would have come in 2024 have been preponed by four years.
A lot of resources will have to be put in to meet the BSVI norms. Our team that works on emission will be fully tied up. We may have to decide to put certain things aside to focus on BSVI.
For your larger SUVs in future, will you look at a specific engine capacity?
Engine capacity is not a determinant of pollution. There is no correlation between engine size and affluence. Our biggest engine (2.5 litre) goes in our least expensive vehicle, the Bolero. Emission norms are based on per kilometre of driving. It has nothing to do with engine capacity. But if that is the decision, we will align to it. I hope the SC will revisit the view that a bigger engine means more emission. We will be keeping ourselves flexible. We can launch 2 litre engines across the board or we can do a mix of 2 litre and 2.2 litre. As we move forward, for the bigger vehicles we will look to see if we can go below 2 litre if a perception sets in that smaller engine means less emission.
Unfortunately, we cannot change perceptions.
With the current reaction against diesel vehicles, does the technology need an image makeover?
Everything has to be looked at holistically. There is nothing that is all good or all bad. If we constantly keep talking about the negative side, that perception gets built up.
Diesel’s biggest virtue is that it has lower CO2. To meet the COP21 commitments that India has made, the biggest enabler we have is more use of diesel. One thing that is bad in diesel is PM emission compared to petrol. Nobody can take it away. I can reduce PM emission when we move to BSVI but other pollutants like CO is good in diesel.
Beijing has hardly any diesel vehicles but it still has high pollution. It has been proven again and again that the high PM in Delhi is not only due to diesel vehicles. The fact that
diesel is not a clean vehicle is all because of focus on one aspect, the PM2.5 without looking at the contribution of passenger vehicles to PM2.5. There is a need for image makeover. We need to talk more about the virtues of diesel. But if I do that right now, nobody is going to listen. We have to wait for the situation to change.