Nepal mandates Euro-5 and Euro-6 vehicles standard

KATHMANDU: Nepal has introduced stringent new vehicle emission standards, allowing only Euro-5 and Euro-6 compliant vehicles to be imported and sold, effective immediately. The regulation, published in the Nepal Gazette on Monday under the ‘Nepal Vehicle Pollution Standards, 2082,’ bans vehicles below these standards, phasing out the previously permitted Euro-3 and Euro-4 models. The move, aimed at tackling rising air pollution, is poised to disrupt the automotive market, with prices expected to rise by up to 20%.

The sudden shift has caught dealers off guard, as many were still importing cheaper, more polluting Euro-3 vehicles. “Euro-6 compliance will undeniably inflate costs. We’re looking at price hikes of up to 20% for commercial vehicles, though the impact will vary by brand,” a motor company executive said. The price surge is likely to hit consumers hard in Nepal’s cost-conscious market.

Vehicles imported from India, which supplies most passenger four-wheelers, may face fewer issues, as they largely comply with Bharat Stage VI (BS-VI), equivalent to Euro-6. However, imports from other countries, often Euro-5 compliant, could encounter logistical and cost challenges. “A phased transition would have softened the blow. This sudden jump will inflate costs across the board, and consumers will bear the brunt,” an automobile association representative said, criticizing the government’s leap from Euro-3 to Euro-5 and Euro-6 without adopting Euro-4.

The new standards require advanced technology, including sophisticated engines and software, necessitating major investments. “Euro-6 vehicles are a different beast—everything from maintenance to diagnostics relies on high-tech systems. This means higher costs for service centers and, ultimately, customers,” the representative added. Upgraded workshops with computerized systems and trained technicians will further drive up operational costs.

Two-wheelers are also affected. “The components—sensors, electronics—are pricier, and maintenance will cost more. We’ll also need to invest heavily in training and equipment,” a motorcycle distributor said, estimating a 10% price increase for Euro-5 compliant motorcycles and scooters. While 60% of Nepal’s two-wheelers already meet BS-VI or Euro-5 standards, the remaining 40%—mostly Euro-3 or Euro-4—face challenges.

Dealers are frustrated by the lack of transition time. “Manufacturers need three months to adjust production, but the government’s tight deadlines are creating chaos,” the distributor noted. Companies with open letters of credit have received limited relief, but new orders are in disarray. The automobile association has called an urgent meeting to address the crisis, warning of potential supply shortages and further price hikes.

The policy aligns Nepal with global environmental goals, promising cleaner air but at a significant cost. “This sudden jump will inflate costs across the board, and consumers will bear the brunt,” the association representative reiterated, urging the government to extend the transition period to mitigate economic strain. Without such measures, the industry fears that the financial burden could overshadow the environmental benefits, leaving both businesses and consumers grappling with the fallout of this ambitious reform.