Despite frantic attempts to liquidate their stocks of BS-III vehicles in the last three days of March, automobile companies are saddled with an inventory of 1.2 lakh such vehicles, worth ₹5,000 crore, across the country.
According to the Society of Indian Automobile Manufacturers (SIAM), automobile companies offered discounts to the tune of ₹1,200 crore in the last three days of March, after the Supreme Court imposed a ban on sales of BS-III vehicles from April 1.
“The first option is to export these vehicles to other markets, which some companies have already done; the second option is to bring back the vehicles that had already reached dealers before the Supreme Court’s order. But that would be very expensive,” Sugato Sen, Deputy Director-General, SIAM, told reporters here on Tuesday.
Most of this unsold inventory includes two-wheelers and commercial vehicles, he said. Many companies, he added, are figuring out what to do with them, as not all can be made BS-IV-compliant by tweaking a few components.
Such heightened uncertainty in the business environment will affect investments in the auto industry, and ad hoc changes in the policy environment will affect profitability of OEMs, the industry lobby said.
Due to some advancing of sales in the last quarter after the Supreme Court verdict on BS-IV, sales of light commercial vehicles are expected to be weaker, which may impact overall sales growth in fiscal year 2018, SIAM said.
As of March 20, automobile companies had inventories of 8.24 lakh BS-III vehicles, valued at ₹20,000 crore; these included 6.71 lakh two-wheelers, 96,700 commercial vehicles, 40,048 three-wheelers and 16,198 passenger vehicles.
According to Vishnu Mathur, Director-General, SIAM, the government should make BS-VI norms clear so that such losses can be avoided in the future. BS-VI norms will be mandatory from April 2020, and the industry expects the government to make clear whether registration of existing vehicles would be allowed from such date.
“You cannot live with this kind of uncertainty till 2020. There has to be some clarity on what’s happening and the sooner it comes the better. These technologies for emission control are not designed by any OEM, but designed by solution providers and larger multinational companies,” Mathur said.
Companies have to design specific solutions for not only each model, but for each variant, he added.
Therefore, more time may be required to validate and adapt these technologies to Indian conditions. And even the three years to 2020 could be a challenge, he noted.