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Maruti sews up technical strategy to overcome Euro hurdle

George Iype in New Delhi

Hit by the Supreme Court’s rejection of its plea to extend the deadline for complying with the Euro emission norms, the country’s largest car manufacturer, Maruti Udyog Limited, has chalked out a multi-pronged technical strategy to tide over the worst crisis it has faced in the last 15 years.

MUL’s full-time directors huddled together for an emergency meeting on Friday in the backdrop of the stringent court order. The apex court had drastically restricted the registration of any new cars in Delhi and the National Capital Region that do not conform to the Euro-I emission levels.

Although the market leader Maruti exports Euro-compliant cars, none of its models being sold in the Indian market conforms to the Euro-I norms.

Therefore, MUL officials said the company board has passed a string of decisions to ensure that the court verdict does not paralyse its huge car market in the country.

First, as an immediate measure, the company has decided to modify outdated, existing carburetors into down-draft or return carburetor engines to comply with the pollution norms. Officials said the carburetor modification is a cost-effective technical improvement that meets the Euro-I emission norms for the time being.

The company has been planning to make the carburetor changeovers and adopt the first levels of Euro-I emission by October 1, 1999.

But officials claimed that as the court order does not make any leeway, MUL would be able to make the carburetor modification to match the Euro-I norms within ten days.

But to match Euro-II norms, MUL is actively considering importing multi-point fuel injection engines from Japanese engine firm Denso within four months. Initially, the imported MPFI engines would be fitted in the high-selling models like 800, Zen and Esteem.

However, the single most important problem that throttles this plan is the hefty import bills MUL will have to shell out for the nearly 20,000 MPFI units per month. The import bill is estimated to be anything around Rs 2.5 billion. MUL is yet to decide whether to absorb it or to pass it over to the customers.

MUL officials said the Euro-II compliant models would most probably push up the cost of each car by at least Rs 30,000.

The imminent cost hike notwithstanding, MUL would soon place the order before Denso to ensure that the company is not hit by the pollution crisis by the end of the year.

MUL has already entered into a joint venture with Denso to produce MPIL kits locally in India. The new emission norms have forced MUL to speed up completion of the project with Denso as early as possible.

The MUL-Denso factory is expected to be operational by March 2000. The Supreme Court has set April, 2000 as the deadline for car companies to implement the Euro-II emission rules.

As its car sales are badly hit in the National Capital Region, MUL is also taking unprecedented initiatives to despatch more vehicles to the regional and rural areas in an attempt to expand its market share.

The NCR accounts for nearly 23 per cent of the MUL’s total sales in India.

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