M&M redesigns diesel engine to beat Delhi ban

Sales of models with the new sub-2,000cc engine will first begin in the Delhi and National Capital Region

Sports utility vehicle market leader Mahindra & Mahindra launched a sub-2,000cc diesel engine that will allow it to sell its Scorpio and XUV500 models in Delhi and the surrounding region, a little over a month after the Supreme Court banned its sales there.

The court had banned sales of all vehicles having diesel engines more than 2,000cc till end-March 2016, on a public interest suit over rising pollution in the capital.

The Mumbai-based company said on Friday sales of these two popular models with the new engine that will circumvent the ban are to first begin in the Delhi/National Capital Region (NCR) and then be extended to the rest of the country. The company’s stock jumped 4.5 per cent to close at Rs 1,191.45 on the BSE.

Mahindra was hit the most by the SC order, as a majority of its volumes are from vehicles with more than 2,000cc engines. The Delhi-NCR region contributes four per cent of M&M’s national passenger vehicle volumes, typically 17,000 units a month.

Last month, M&M had said it was working with dealers to refund the payments by people who’d booked these vehicles before the ban. Inventory of at least Rs 100 crore was affected. This new launch will allow the company to resume sales of the two models in these regions.  

The new 1.99-litre engine on the Scorpio (delivering 120 Hp) and on the XUV500 (delivering 140 Hp) will be an additional offering; existing engines will continue to be retailed. Peak power delivered by the new engine is the same as its 2.2-litre engine. This new engine has been in the works since 2014.

M&M was among the companies affected which had petitioned the SC for a review but all of them are also trying to re-design their engines as Mahindra has or are readying a petrol option which was not originally offered.

Japanese car maker Toyota and German luxury giant Mercedes-Benz, for instance, will offer petrol variants to customers affected by the ban. Toyota will offer a petrol engine on the Innova and Mercedes for some of its luxury cars.

Anand Mahindra, chairman of the Mahindra Group, is currently in Davos for the World Economic Forum, tweeted: “What a team we have..I bow low to them. With awesome speed, they reconnect us to our customers in the NCR.”