CAFE III kicks in from 2027: Will your next car be cheaper to run?
The Indian government is set to implement CAFE III fuel efficiency norms starting in 2027, requiring automakers to improve fleet efficiency. Consumers are weighing the potential for lower fuel costs against the likelihood of higher vehicle purchase prices.
Why it matters
These regulations will significantly impact the automotive market in India, influencing the adoption of EVs and hybrids while affecting consumer affordability.
What if your next car saves you more at the fuel station but costs more in the showroom?That is the next big question as Indian consumers are asking themselves while the government prepares to roll out its new Corporate Average Fuel Economy (CAFE III) norms from April 1, 2027.Over the next five years, carmakers will have to make their passenger vehicle fleets progressively more fuel-efficient, potentially bringing more efficient petrol cars, hybrids, electric vehicles (EVs) and alternative-fuel models to the market.Notified by the ministry of power, the new rules will remain in force until March 31, 2032. They tighten fuel-consumption targets while offering incentives for cleaner technologies and ethanol-blended fuels. The fleet-average benchmark will fall from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, an improvement of around 16.7%.But what does that mean for your wallet?
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