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Bombay, June 2019 (illustration image). Getty IMages

India had one of the strongest growth rates in Asia a year ago, with rates of 7%. It collapsed to 4.5% in the third quarter of 2019, the lowest rate in six years. And one of the sectors that is experiencing a strong slowdown is that of the automobile. Several factors may explain this, including the new anti-pollution standards which have an impact on the price of cars.

2019 was a nightmare for automakers: vehicle sales plunged 18% from April to November last year compared to the previous year. And up to 25% for private vehicles. It's a shower all the colder as the Indians are still poorly equipped with cars and since the sector has experienced annual growth of almost 10% in recent years.

India tackles pollution

The demonetization of banknotes imposed by the government three years ago has dampened the economy and it has not rebounded. Banks are also heavily indebted, because of bad loans they cannot recover, and they therefore do not lend as easily as before to individuals who would like to buy a car. There are also the new fuel standards, imposed to reduce pollution . From next April, all vehicles sold in India must comply with the new BS6 emission standard, which corresponds to that called Euro 6 in force in Europe. This is an important improvement, because it makes it possible to divide by five the quantity of sulfur emitted by these vehicles. But this conversion has a cost, which therefore automatically affects the price of these cars between 5% for petrol vehicles and 10% for diesel, which are more polluting and therefore more difficult to convert. The biggest Indian brand of passenger cars, Maruti-Suzuki, has just announced that it will stop selling diesel cars this year, because updating the engines of this fleet is not profitable.

Incomplete measurements

The problem, however, is that these standards will only apply to new vehicles, and that all old ones, often very old and polluting, will continue to circulate. Too often, utility vans are seen emitting thick black clouds of smoke behind them, and even if each vehicle must pass a regular emission control, the police rarely do so. One of the measures that could solve this problem is the launch of a public policy for the recovery of old cars, such as a scrappage bonus. And it will also delight manufacturers who will then see their sales go up.

► Faced with unbreathable pollution, New Delhi establishes alternating traffic