Impact of BS IV implementation on Auto Industry: a closer look

The Ministry of Road Transport and Highways in a draft notification announced that Bharat Stage IV mass emission norms for 2 wheeled 3 wheeled and 4 wheeled vehicles will be mandatory across the country from April 1, 2017.

In 2010, as a response to precipitous decline in air quality, the government had initiated the Bharat Stage IV. To regulate the output of air pollutes from internal combustion engine equipment including motor vehicles .In 2010 it was implemented for 13 cities in India, but from April 1, 2017 it will be applicable for whole country
In recent times automobile industry wanted a relaxation of the deadline . It is expected that the prices of BS IV vehicles will be relatively higher than the present BS III vehicles and due to this, the overall demand may get affected because to produce vehicles as per BS IV, the producers have to make substantial changes in vehicles which will increase production cost. The medium and heavy commercial vehicle (M&HCV) category will have huge impact as 95% of trucks in India are currently BS III type. BS IV vehicles will be equipped with changes in power train with key aggregates like axles, gearbox, and engines will be further optimised as per BS IV fuel. Due to which truck prices may rise by 10-12%.It is expected that Overall M&HCV vehicles will go up between Rs.100000-Rs.200000.Usage of SCR (selective catalytic Reduction) requires urea to be filled after certain intervals which will increase operating costs rise by up to 2% .To avoid this, fleet owners will try to prepone buying in last quarter of this fiscal year. This may lead to jump in volume in Q4 FY17.

However, as power trains transform to largely mechanical engines to electronic engines, they will provide improved fuel economy and lowered emissions and also reduced maintenance cost. Overall we expect huge shift in Auto Industry due to BS IV implementation.