The Society of Indian Automobile Manufacturers (SIAM) has moved the Supreme Court seeking an extension of the cut-off date for the sale and registration of Bharat Stage (BS) IV vehicles to March 31.
Some state governments have recently issued circulars directing that no application for the registration of BS IV vehicles would be accepted on or after certain dates, which, according to SIAM president Rajan Wadhera, are much ahead of March 31, 2020. “The cut-off dates range from February 29 to March 25, 2020, from state to state, though BS VI emission compliance is mandated from April 1, 2020.”
These directives from the state governments have put customers, dealers, and vehicle manufacturers in severe discomfort as each of them is racing against time to exhaust the BS IV stocks, which are with the dealers, Wadhera said.
The SC has already ordered that no BS IV vehicle will be sold or registered from April 1, 2020. This leaves automakers with a little over two weeks to clear BS IV stocks, especially a large number of two-wheeler stocks that remain with dealers. The current rule states that any unsold BS IV vehicle would end up as scrap after March 31.
Earlier, automobile dealers had expressed concerns that they would not be able to clear the BS IV inventory before March 31 as the registration process for these vehicles ends much before it, and the fear of coronavirus keeping buyers away from showrooms. This comes in the wake of more than 110 coronavirus cases and three deaths reported in India.
The Federation of Automobile Dealers Association (FADA) had also expressed serious concerns over inventory pile-up with dealers across segments. The SC, on February 14, had rejected FADA’s application on extending the deadline of BS Vi transition due to huge unsold BS-IV inventory and slowing sales. “But there has been a drastic change in circumstances in conducting business as usual. Coronavirus has spread rapidly across the globe and also in India. Following this in the past week, there has been a drastic drop in sales and customer walk-ins have reduced to a trickle as caution sets in due to fear of spreading of the Virus. Counter sales have fallen by 60-70% across auto dealerships in the past few days,” FADA President Ashish Harsharaj Kale said.
FADA has once again approached the SC on BS IV sales extension. “The situation has worsened in the past three-four days with partial lockdowns in many towns and cities and few district magistrates have started issuing notices of closure of shops and establishments, including auto dealerships to stop the spread of the virus,” Kale said.
He said that the dealerships may face closures if leftover with unsold BS IV stocks. “Two-wheeler inventory of BS-IV vehicles continues to be a serious concern for FADA. With the apex court not considering our application for the sale extension for BS IV, the federation seriously urges original equipment manufacturers (OEMs) of two-wheelers to handhold the dealers for 100% liquidation of their BS IV stocks,” FADA said.
A recent FADA survey had revealed that a large number of two-wheeler dealers will not be able to fully liquidate their BS IV inventory and they have received inadequate support from their OEMs for 100% liquidation of the stock.
While the average inventory for the passenger vehicle (PV) segment ranges from 10-12 days and that of two-wheelers’ ranges from 20-25 days; and the average inventory for commercial vehicles (CV) ranges from 10-15 days, the FADA said.
“With regards to PV and CV segments, the overall inventory has been at a reasonable level but the challenge remains in slow-moving, non-popular models, as dealers look for adequate OEM support for liquidation of the same in March,” it said.
FADA says the BS VI vehicle supply is also affected due to the virus outbreak in China and an already difficult transition becomes all the more difficult with unexpected situations unfolding all around.
“Due to this, the outlook for March is negative,” it said. FADA suggested that the government can give a relief package with a temporary reduction in goods and services tax (GST) till stability returns and a financially attractive scrappage policy, which will not just reduce pollution on roads of older vehicles but will also help in reviving CV sales, the worst-hit segment currently, it said.