Mahindra Surges After Offering Engine That Beats Delhi Ban

  • Mahindra unveiled a new 1.99-liter diesel engine on Friday
  • Court temporarily banned large diesel vehicle sales in Delhi

Mahindra & Mahindra Ltd.surged the most in more than 17 months after the automaker introduced a smaller engine for two of its most popular SUV models, allowing the company to circumvent a ban on large diesel-powered vehicles in India’s capital.

Shares of India’s biggest SUV maker gained 5.3 percent to 1,198.90 rupees at the close in Mumbai, the biggest advance since August 2014. The benchmark S&P BSE Sensex climbed 2 percent.

Mahindra on Friday unveiled a 1.99-liter diesel engine as an option for the XUV500 and Scorpio. That would get the vehicles around a Supreme Court ban on the registration of diesel vehicles with engines bigger than 2 liters.

“No one expected Mahindra to tweak its engine so swiftly,” said Bharat Gianani, an analyst at Angel Broking in Mumbai. “This is definitely good news for Mahindra as it allows them to resume selling its most successful models in Delhi after the court ban.”

Mahindra’s action shows how automakers are adapting to the unprecedented restrictions imposed by India’s authorities as officials sought to clean up the foul air blanketing many of its cities. Besides the ban on large diesel vehicles, the government has doubled a levy on diesel vehicles entering New Delhi and barred those registered before 2005.

New Delhi and its suburbs account for 7 percent of the country’s passenger vehicle deliveries. Mahindra had said in December that the top court’s judgment affects sales of some products in the region.

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