Hyundai and Mahindra brace for tougher fuel efficiency norms

MAHINDRA & MAHINDRA (M&M) and Hyundai Motor India, two of India’s top four automakers, will have to work harder than their peers to comply with the upcoming CAFE 3 regulations — rules that are set to favour smaller cars, hybrids, and flex-fuel vehicles.

- SWARAJ BAGGONKAR

The revised Corporate Average Fuel Economy 3 (CAFE 3) norms, scheduled to take effect from April 1, 2027, will be more stringent than the current standards, introducing tighter carbon dioxide (CO2) emission limits. The new target is 88.4 g/km, compared to the earlier proposal of 91.7 g/km and the existing CAFE 2 benchmark of 113 g/km.

Automakers like Tata Motors, which benefits from a larger share of EVs in its portfolio, and Maruti Suzuki India (MSIL), which has a strong base of small car sales, are relatively well positioned to meet the new standards. In contrast, M&M and Hyundai will face increasing challenges from FY29 onwards.