Sectoral Performance

Is the Indian automobile sector as environmentally conscious as best in the world?

NO! Automobile sector has fared badly. Under the project rating scale we were to award five leaves award to the best company. But sadly no auto company deserved this honour. The best company gets less than 45 per cent marks getting a mere three leaves award. But the sector as a whole gets even lesser, scoring 31.4 per cent, deserving only two leaves award.

The passenger car segment leads the way among the entire automobile segment and is the only segment which gets three leaves. Mass transport vehicle segment comes second. The two and three wheeler segment, with two leaves, lags behind even the mass transport vehicles, which has performed better due to introduction of CNG fuelled vehicles.

THE GOOD, THE BAD, THE UGLY
In terms of overall performance, the three companies, which top the environmental rating, are Daewoo Motor India Ltd., Hyundai Motors India Ltd. and General Motors India. All these three companies have performed well in product usage phase.

The companies, which are at the bottom of the pile, are the three non-participating companies, Bajaj Tempo Ltd., Yamaha Motor Escort Ltd. and Swaraj Mazda Ltd.

Maximum of the companies in top ten are passenger car manufacturers while most of the two and three wheeler manufacturers have shown a poor performance trailing behind in the ratings. However, there is an exception, Hero Honda Motors, which has not only achieved three leaves rating but also ranks fifth in overall rating.

The other two and three wheeler companies lag very far behind. Though Bajaj Auto Ltd. and TVS Suzuki follow Hero Honda Motors as the 2nd and 3rd in the segment but in the overall rating they fare poorly.


WINNERS AND LOSERS
As far as individual products are concerned, Daewoo's small car Matiz, has been judged as the most environment friendly vehicle overall, scoring high in terms of vehicle and engine design, and also performing well in other aspects such as pollution control equipment installed and emissions.
Maruti's most popular vehicle in the country Maruti-800 (Euro II model) is the second most eco-friendly vehicle. It scores less than Matiz in terms of design but scores more in the emissions. The third most eco-friendly vehicle is Hyundai's Santro, which also has the highest fuel efficiency.

Small is beautiful--All the top three eco-friendly vehicles are small cars and have inherent advantages over the larger ones in the sense that they emit less pollution and consume less fuel compared to larger vehicles. They also use lesser material during manufacturing stages.

Honda City 1.5V-tech gets the recognition of being the most technologically advanced and least polluting vehicle in India with emission as low as 85 per cent lower than the Euro II norms.
The vehicle with the worst performance environmentally is Mahindra & Mahindra's Armada, which comes last in the passenger car segment. It has scored very low in all criteria.

Among the two and three wheelers, both selected models of Hero Honda (Splendor and CD 100) are the most eco friendly two wheelers. They have scored above average in vehicle and engine design and are one of the very few four-stroke two wheeler fitted with any kind of pollution control equipment.
Bajaj boxer, the latest model of Bajaj Auto that ranks third, has scored well in vehicle and engine design but lacks in emission control equipment and comparatively poorer emission.

The best performing two-stroke model ranks fourth amongst the two wheelers. The lowest score has been obtained by Kinetic Safari moped, which obtained average scores in design and emissions and very poor scores in pollution control equipment and emissions.

Among the mass transport vehicles Ashok-Leyland's Viking compressed natural gas (CNG) bus scored above average in design and very high in emissions due to inherent advantages of CNG vehicle making it the best performer in this section. The second position is also taken by another CNG fuelled vehicle, that is, Telco LPO CGS bus. Interestingly, the worst performers in this segment are Ashok Leyland's diesel fuelled Comet 1611 and Tusker Turbo tractor.

A total number of 29 automobile manufacturers were selected for the project of which 26 companies participated voluntarily (90 per cent participation). The three companies which refused to participate and chose to continue being non-transparent are Bajaj Tempo Ltd., Yamaha Escorts Motor Ltd. and Swaraj Mazda Ltd.

MODUS OPERANDI
The Green Rating of Indian Industry project was started by the Centre for Science and Environment (CSE) in 1996 to address an array of environmental issues facing all segments of Indian industries. The project is supported by the United Nations Development Programme (UNDP) and the Ministry of Environment and Forest (MoEF). The first sectoral rating undertaken under the pilot phase of the project was pulp and paper sectoral rating, which was a highly successful exercise and was rated as the best environmental audit project in last 25 years in Asia by 'Asia Week'.

Spanning over a period of two years, Green Rating of automobile sector was a great challenge owing to diversity between companies in their production processes as well as the products manufactured. Participation of all the major automobile companies in the exercise makes it a unique effort to assess the environmental health of the sector. The project has covered 35 production facilities spread in nine states and almost 80 per cent of the products currently running on Indian roads.

Methodology
The rating methodology for automobile sector has been developed keeping in mind the life cycle impact of the automobile industry. Thus, the weightages were allotted accordingly with 80 per cent of the score devoted to life cycle analysis (LCA) and remaining 20 per cent for corporate governance.

The life cycle assessment included determining the environmental impacts at various steps of the production process right from sourcing of raw materials, to the manufacturing and assembly process, to the pollution caused by use of the vehicle, and finally the impact caused by its disposal.

Of the 80 per cent on the life cycle assessment, the highest weightage (56 per cent) was allotted to the product use phase based on the conclusion arrived at by the project that maximum pollution occurs during use phase. "Vehicle are the core of the automobile industry since they alone generate about 80 per cent of the total life cycle pollution," says Chandra Bhushan, Coordinator, Green Rating Project, CSE. "In order to assess the environmental performance of the product, a combination of engine design, pollution control equipment fitted and the emission test data supplied by the test agencies were considered, making this exercise the most comprehensive ever taken anywhere in the world. Even the green automobile ratings done in the US and in Europe only consider emissions and fuel consumption data to rank the vehicles. Green rating project has taken a quantum leap over the existing automobile rating methodology" he adds.

Robustness of the Rating methodology
'Engine design analysis should represent the emissions from the vehicles,' was the main focus for arriving at the robustness of the product rating criteria, developed by GRP, since the engine and vehicle rating was given by the project and the emissions rating was given on the basis of the test data of certified test agencies. Therefore, the litmus test for GRP was to correlate the ratings given by two separate institutions with no interaction between them. This was very well reflected in high coefficient of correlation found between the scores obtained in engine design and pollution control equipment, and the score obtained in emission. For example, in petrol passenger cars in 78 per cent cases the engine design did represent the emission characteristics of the vehicles.

Testing the effectiveness of the rating methodology in replicating the life cycle analysis, the test undertaken by the project was to correlate the overall rating with the vehicle's rating. Since, as per life cycle analysis, a company with poor product should get poor results, however good it may be on other aspects. This too was very well established in the rating with product rating having a very high correlation (97 per cent) with the overall rating. However, the analysis brought out the fact that the other criteria were as important and were seen to have high degree of correlation with the overall ratings.

REVELATIONS
Green rating project findings draw its process on the principle that root of the cure of any disease lies in the proper diagnosis rather than just medication!!!

More miles per litre
A fuel-efficient car would be the cheapest vehicle in the long run and an important consideration for the customer as well. The Hyundai Santro was judged the most fuel-efficient petrol passenger vehicle followed by Fiat Uno and Maruti-800 Euro-II model. In case of diesel passenger car, Mitsubishi Lancer was judged the most fuel-efficient and Toyota Qualis Euro-I model was most fuel-efficient multi-utility vehicle.

Clean fuel, clean vehicle
We did a comparative analysis of impact of fuels on emissions.

Study based on analysis of three diesel-fuelled mass transport vehicles and two CNG fuelled mass transport vehicles clearly showed that CNG fuelled vehicles are far better in terms of tail pipe emissions than the diesel fuelled mass transport vehicles. CNG-fuelled vehicles have as much as five times lower particulates and overall 73 per cent lower emissions than their diesel counterparts.

Overall petrol vehicles show an inherent advantage over the diesel-fuelled vehicles with all the top 14 cars being petrol ones. The best diesel car, which is Mercedes E 220, ranks as low as 15. While the best multi-utility vehicle, Toyota Qualis Euro II model ranks a dismal 20th among all the 31 models.

Are MNCs better than Indian Companies?
Green rating project reveals that contrary to the prevalent belief there is hardly any difference in the overall performance of Indian companies and MNCs. Both of them meet the same environmental standards in each and every aspect. A double standard was perceptible in the business pattern of MNCs as they were following a practice of dumping obsolete products on the pretext of poor fuel and existing regulatory norm in the Indian market. Other than corporate environmental governance and pro-active initiatives, Indian companies are at par with the MNCs.

Does cleanliness make business sense?
Yes it does. A fairly tangible correlation was observed between the environmental performance and economic performance of companies in the automobile sector. On an average, in total automobile segments it was found that about 67 per cent of time there was direct relation between the environmental rating and profit of company. That is, if a company is good on the environment front, it is also sound in its balance sheet. In specific vehicle segment, this correlation was very high, as high as 81 per cent in two and three wheeler companies.

Consumer awareness
Although, insufficiently informed consumers contribute to 80 per cent of the pollution generated by automobile companies on road. Yet the sector in itself or through its dealers has not taken any proactive effort to educate these consumers. Two and three wheeler companies are the worst in consumer awareness raising initiatives. Except for giving free servicing not much has been done to educate people.

Maintenance of the vehicles
The project found that though the maintenance of the vehicle plays a major role in the overall environmental performance during the vehicle use, the strategy adopted by the automobile companies do not provide enough incentive to the consumers to go to the authorised service stations/ workshops. The cost of maintenance at authorised service stations were found to be as high as 50 to 100 per cent than the unauthorised stations, and this was the main reason why consumers avoided going to the authorised stations once their vehicle became a bit old. Automobile companies need to work on economy of scale and provide enough incentive to the consumer to use authorised service stations. This will not only reduce the pollution load but will also improve company's bottom line. Companies need to think in terms of annual maintenance contract to facilitate this recommends green rating project.

Impact of fuel quality
GRP analysis on Indian automobile segment clearly shows that the companies are holding fuel quality responsible for pollution. Whereas, the truth is that current engine design in India is at least a decade old compared to similar type of vehicles manufactured in western countries. Basic initiative towards improving the engine design is lacking. Use of alternative fuels over conventional fuels is yet to take its start in major way and their needs to be a big boost in the development of this concept in India.

The automobile sector in general has not taken much effort to establish the impact of fuel quality on emissions. Some studies undertaken by companies have shown that there is hardly any consistent trend to show that the fuels are mainly responsible for the poor emission quality. Role of age factor on the effectiveness of catalytic converters too needs a comprehensive study to establish a relation as it plays a great role in determining the pollution scenario on roads.

Impact of various parameters on fuel efficiency
Impact of various design parameters of vehicles on the tail pipe emission and fuel efficiency was carried out by the project. Weight of the vehicle and its engine size was found to have inverse relationship with fuel efficiency, though compression ratio had a direct relationship.

The project also found that a Indian passenger car switching over to multi point fuel injection system from the carburettor system can expect a reduction in the tail pipe emission in the range of 25 per cent to 40 per cent.

Another interesting finding was that majority of the petrol passenger cars running on the Indian roads are using catalytic converters which does not suit their engine design.

Which is better? Two stroke or Four Stroke.
On the comparative performance undertaken for two-stroke and four-stroke two wheelers, the outcome clearly established that four stroke two-wheelers are better that two stroke two-wheelers with respect to both emission and fuel efficiency.The carbon monoxide (CO) and hydrocarbons and nitrogen oxides (HC+NOx) emitted by two-stroke two-wheelers (with catalytic converter) are 23 per cent and 38 per cent, respectively higher than their equivalent four-stroke two-wheelers without catalytic converter.

Meeting of regulations
While some Indian vehicles are meeting Euro II equivalent norms in the national capital region of Delhi and Euro I equivalent norms in the rest of the country, it was found that overall, automobiles in all the segments are meeting the regulatory norms well. However, GRP found that this is not enough as there are companies that can go much beyond the minimum regulatory requirement but absence of incentives from government discourages them. Government should come out with some incentive mechanism to differentiate between just a good performer and excellent performers.

Supply Chain Management
Green rating project closely scrutinised the practice of outsourcing by Indian automobile companies and found that majority of pollution during automobile production takes place at the supplier and vendor's site, most of them being small and medium scale companies. Overall automobile companies had a very poor performance on this aspect. The project found a clear trend of transferring of pollution by automobile companies to its supply chain. Companies urgently need to adopt a green procurement policy and green up their supply chain.

Importance of ISO 14001
Almost half of the automobile sector has adopted environment management systems (EMS) standards. However ISO 14001 adopted by automobile companies is not the actual reflection of their environment management as these companies are just assembly plants. Most of their processes are outsourced and the major pollution happens at vendor's site and during product use and disposal. Thus, ISO 14001 only takes care of very small percent of pollution generated by the companies. The project has recommended automobile sector to adopt an environment management system, which reflects the environmental aspects of automobile business and not to use the existing system, which is production centric.

Some other findings related to production process:
1) The entire sector uses paints that contain heavy metals and are based on solvents. No company uses water based paints
2) The regulatory standards for wastewater characteristic applicable to the automobile sector are lax as well as irrational

THE WAY AHEAD
"Business Planning but with the ingredients of Social, Environmental and above all Ethical consideration imbibed in it will define the future of Indian Automobile Sector", says Sunita Narian, Director, CSE. "We recommend a coherent approach to be adopted by automobile industry, government and consumers. Once the consumer starts including environment in their buying decisions, which they should because environment in automobile actually means economy and savings, companies will be pushed to improve," adds Chandra Bhushan, coordinator of Green Rating Project.

Companies cannot afford to loose their market given the kind of cutthroat competition existing in India today. Consumers need to build on the research outcome of green rating project, and ask for emission and fuel efficiency performance of automobiles as their buying criterion along with price.
Government on its part should come out with economic instruments as its major tool to regulate automobile companies. Pollution control body too needs a complete rethinking of its regulatory approach to this sector. Wastewater characteristics, solid/hazardous waste management, paint sludge incineration, dioxin and furans are some major aspects of automobile pollution during manufacturing process-regulations for which are either weak or non-existent. Downstream pollution checks and supply chain management are also some issues where regulatory bodies will have to do some soul searching.

Automobile companies need to do a lot of rethinking. Extensive research and development, option of alternate fuels, clean technologies and quality control to oversee adherence to product conformance will shape the future of automobile sector in India.

Companies must come forward and be more active in shouldering their responsibilities in educating consumers regarding good and bad features of vehicles.

Proactive dialogue between this sector and society in general could pave the way for long-term solution to the various pollutions caused by the automobile sector. All stakeholders need to come together to improve the environmental performance of this sector. We have just made a start, a lot more needs to be done.