Siam scrambles as CAFE-3 consensus crumbles
The Society of Indian Automobile Manufacturers (Siam) had previously agreed on the emissions standards, submitting a consensus proposal to the government in December 2024 regarding the third edition of so-called Corporate Average Fuel Efficiency (CAFE) norms. The rules, set to take effect from April 2027, aimed to slash the average carbon dioxide (CO2) emissions of new passenger vehicles. The proposed target is a fleet-wide average of 91.7 grams of CO2 per kilometer for a typical vehicle weighing around 1,170 kg. However, differences have cropped up since then.
CAFE norms set maximum average emissions for all cars a manufacturer sells, pushing them to produce more fuel-efficient vehicles.
'Different view'
'Of late, we have seen certain manufacturers have formed a different view (on CAFE-3)," said Shailesh Chandra, president of Siam, and managing director of Tata Motors' passenger vehicles business.
The reason: Maruti Suzuki India Ltd, which dominates India's car market with its popular compact cars, has since begun advocating for less stringent emission limits for vehicles below 1,000 kg. The company, which already faces stricter targets given its lighter cars, has no EV on sale as yet. Meanwhile, selling electric vehicles is a faster way for many automakers to meet emission targets, bringing down emissions across their fleet.
The proposed CAFE norms permit heavier vehicles a comparatively higher CO2 emission target, while lighter vehicles face a stricter limit. Maruti Suzuki says this system unfairly penalizes its portfolio, which includes many of India's lightest, most fuel-efficient and best-selling vehicles. Chairman R.C. Bhargava and executive director Rahul Bharti have publicly criticized the norms as being "favourable to heavier vehicles and punishing lighter cars."
Back to drawing board
With Maruti Suzuki's revised stance, Siam faces the task of re-engaging its member companies to seek a new consensus before determining whether to adjust its December 2024 submission. The outcome will have significant implications for India's auto industry, influencing vehicle development, pricing strategies, and the nation's ambitious climate targets. It will also test the integrity of one of India's oldest lobby groups, which was established in 1959, and works on the basis of unanimity.
According to Chandra, Siam had arrived at its December proposal through negotiations and an eventual consensus by the CEO council of member companies, in a process stretching over months. The lobby group will now go through the exercise again before deciding whether to revise its December 2024 stance, Chandra said. This involves getting a unanimous decision from the CEO council.
Does Maruti Suzuki's change of heart mean that the December 2024 consensus becomes invalid? Chandra declined to specify.
'We will have to follow the process and basis that, we can say if there is a change or not," he said. Chandra was speaking at a Siam press conference to release the auto industry's sales data for the June quarter.
Miffed Mahindra
Maruti's reversal has drawn a sharp rebuke from other major players. Mahindra & Mahindra Ltd, known for its larger sport utility vehicles (SUVs), has written to the Union roads ministry, arguing against any concessions for smaller cars, Business Standard reported. Mahindra contends that small cars constitute a significant portion of India's automotive sales, and easing their emission requirements would remove incentives for manufacturers to innovate and make these vehicles even cleaner. They emphasize that such a move could undermine the broader goal of reducing overall emissions.
The current CAFE 2 norms, in effect since April 2023, mandate a CO2 emission target of 113 grams per kilometer for an average vehicle weight of 1,082 kg. The proposed CAFE 3 rules represent a considerable tightening of these standards. Additionally, the new norms propose using the Worldwide Harmonized Light Vehicles Test Procedure (WLTP) for measuring emissions, a test cycle that more closely mirrors real-world driving conditions and generally yields higher emission figures than the currently used Modified Indian Driving Cycle (MIDC).
Automakers with an average weight of vehicles sold more than 1,170 kg will be allowed relatively higher emissions, while those with a lower weight will have a stricter emission limit. This has irked Maruti Suzuki, which has on average, the lightest vehicle portfolio in India.
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