KATHMANDU: India is mulling over relaxing fuel efficiency standards for small cars weighing under 1,000 kg, as requested by Maruti Suzuki.
The move comes as the country’s top automaker struggles with declining sales of small cars amid the growing popularity of SUVs, according to people familiar with the matter.
Models like the Alto and Wagon R, once bestsellers for Maruti Suzuki, no longer dominate the market. Just two years ago, small cars made up nearly two-thirds of the company’s total sales. Last fiscal year, they accounted for less than half of the 1.7 million vehicles Maruti sold.
“There should be more benefits for small cars. Maruti has been asking for that, and we agree,” a senior government official told Reuters.
Indian government officials fear declining sales of affordable small cars could hurt the overall car market in India.
Any revision in India’s fuel efficiency rules will also affect Nepal, where most small internal combustion engine (ICE) cars are imported from India.
At present, India’s Corporate Average Fuel Efficiency (CAFE) rules link a vehicle’s permitted carbon emissions to its weight. This means lighter cars are subjected to stricter standards. If rules are relaxed, it would be easier for small cars under 1,000 kg to comply. This would reduce pressure to transition to electric vehicles in this segment.
Maruti, which has 10 models in this category, would benefit the most if the rule is indeed changed.
Other carmakers, such as Hyundai, Renault, Toyota and JSW MG Motor, also produce small cars but are reportedly not in favour of changing fuel rules based on car size. They say it could create an uneven playing field.
Companies like Tata Motors, Mahindra & Mahindra and Volkswagen attended a closed-door meeting on June 17, but have not commented publicly.
Suzuki Motor said in its 2024 sustainability report that small cars are better for the environment, as they require less material and emit less carbon.
Any revision in India’s fuel efficiency rules will also affect Nepal, where most small internal combustion engine (ICE) cars are imported from India. Relaxed standards or reduced production costs may translate to more competitive pricing for buyers in Nepal.
