After BS-III vehicles ban, dealers kick off fire sale on bikes, trucks and buses
Two-wheeler majors offer cash benefits of up to Rs 22,000
Hero, HMSI and Bajaj sweeten discounts to move unsold BS-III inventory
It’s time for year-end sales of two-wheelers by leading brands because of the Supreme Court’s Wednesday order, which banned sales of vehicles complying with Bharat Stage-III (BS-III) emission norms from April 1.
Saddled with a few hundred thousand BS-III two-wheelers, industry players, including Hero MotoCorp, Honda Motorcycle and Bajaj Auto, are offering discounts of up to Rs 22,000 on BS-III two-wheelers to clear the inventory.
The two-wheeler industry had about 670,000 BS-III units as on March 20. A significant number has remained unsold despite the push from companies since March 21. Companies will look at options to export the unsold stocks after March 31. These discounts will have some impact on the fourth quarter (Q4) profitability of companies, which will also take a hit during this quarter, owing to a decline in volumes after demonetisation.
In a major setback to the Indian automotive industry, Supreme Court has banned sale of Bharat Stage III (BS-III) vehicles after March 31, 2017. The automobile industry has an unsold BS-III vehicles stock of 8.24 lakh units.
Post the announcement India’s largest two-wheeler manufacturer Hero Motocorp shares declined by about 3% and CV manufacturer Ashok Leyland’s shares dipped by 6% from its day’s height.
The Supreme Court hearing mentioned that public health is more important than inventories and the sale and registration of BS-III compliant vehicles will not be permitted from 1st April 2017.
According to sources in the auto industry, there are 75,000 unsold BS-III commercial vehicles, 16,000 passenger vehicles, 40,000 three-wheelers and 6.71 lakh two-wheelers. Hero Motocorp has over 3.28 lakh units of BS-III vehicles in its inventory which is estimated to be over 1,200 crore.
President of SIAM and MD of Ashok Leyland told ETNow that its unfair if registration of vehicles is not allowed. He also added that Ashok Leyland will not have any impact on company’s sales and operations.
Earlier, government came out in support of the automakers, requesting the apex court to allow the companies to sell their existing stock of BS-III vehicles even after BS-IV emission norms come into force from April 1.
The industry, on March 27, conveyed to the apex court that technically and financially it was impractical to convert BS III vehicles to BS IV, also that unsold inventories form miniscule part of 19 crore vehicles are already on Indian roads.
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References: Time of India, Economics times, Jagran, Money Bhaskar