India Upholds Ban on Diesel Cars and SUVs

Supreme Court says no diesel-engine vehicles over 2,000cc in New Delhi. And that’s bad news for Mercedes.

Arvind Yadav/Hindustan Times via Getty Images

Air quality in New Delhi is bad. Real bad. Worse, even, than that in Beijing. Not only did the government force cars off the road, but in April, the Indian government took further action, banning registration of new diesel cars with a engine sized 2,000cc and above. Mercedes, Toyota and Mahindra challenged the regulations in court. Now, the decision is in: Chief Justice T.S. Thakur has ruled to uphold the ban on new diesel-engine cars until March 31, 2016.

That’s especially bad news for Mercedes. Delhi is the largest automotive market in the world’s second-most populous country, and Merc doesn’t offer any diesel models under 2,000cc there. (The company’s smallest diesel offering there is 2,143cc diesel.) Oh, and diesel models accounted for roughly 70 percent of Mercedes' total sales in India last year. The ruling will hit Toyota, too, as diesel SUVs and minivans both account for more than half of its India sales volume.

Cui bono? Volkswagen, BMW and Audi, all of which offer sub-2,000cc diesels in the South Asian market.