The Supreme Court decision on Wednesday to ban registration of all diesel-run SUVs and luxury cars with engine capacity of 2,000 cc in Delhi and the National Capital Region (NCR) till 31 March, 2016, is likely to hit sales of XUV 500, Scorpio, Tata Safari, Hyundai Sonata, Camry and Fortuner.
M&M makes the XUV 500 and Scorpio, while Tata Motors sells Tata Safari. Hyundai has Sonata and Toyota Kirloskar Motor has Camry and Fortuner in the diesel car segment.
Reacting to the news, the M &M stock went down 4.25% on the BSE at 1 pm and was trading at Rs 1,234. There was no impact on the Maruti Suzuki share which was trading flat at Rs 4,626.60.
"We believe the news is likely to have a negative impact on M&M as about 95% of its passenger vehicle portfolio is above the 2,000-cc range. The news would not have much impact on Maruti Suzuki (it hardly has any product above the 2,000-cc segment) and Tata Motors (Tata Motors earnings are driven largely by JLR, which is a global player)," it said.
An SC bench headed by Chief Justice TS Thakur also directed all taxis in both Delhi and the NCR to convert to Compressed Natural Gas (CNG) before March 2016.
The apex court, in its landmark decision, also raised the levy of green cess by 100% on commercial vehicles entering Delhi, besides directing the Central government to provide masks to all traffic policemen, considering their plight.
Delhi is a critical market for passenger cars and the impact of the SC ruling will indeed be felt, says Angel Broking.
"Delhi contributes about 7% of the overall passenger vehicle sales and the contribution of diesel vehicles is about 2-3% of the overall industry volumes which would further limit the impact of the ban," it said.
Reports have said besides registration of new diesel cars, the ban will hit the inventory of about 6,000 diesel cars at dealer outlets in Delhi.