Auto Dealers Fear They’ll Be Saddled With BS-IV Vehicles After BS-VI Rollout
Hyundai Motor Co. vehicles stand on display as customers talk to sales representatives at the a company’s Koncept Hyundai showroom in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

Auto Dealers Fear They’ll Be Saddled With BS-IV Vehicles After BS-VI Rollout

Bookmark

As of February-end, auto dealers were on track to offload their BS-IV inventory before the rollout of Bharat Stage-VI emission norms on April 1, but they now fear they’ll be left behind with unsold stock.

That is due to coronavirus fears curbing footfalls at dealerships and state governments issuing circulars to end registration process for BS-IV vehicles much before Mar. 31, 2020, Feederation of Automobile Dealers Association said today. Banks too have come out with notices that they would not finance BS-IV vehicles after specific dates.

"So, a lot many things have come together, and now, suddenly, there is fear among dealers that they won't be able to liquidate the BS-IV stock. At the start of March, we were reasonably confident that the problem of leftover stock would not be much," FADA President Ashish Harsharaj Kale told Press Trust of India.

The dealers’ association has approached the state governments and the Ministry of Road Transport and Highways regarding registration of BS-IV vehicles, but confusion has already impacted the confidence of dealers, he added.

FADA is also engaging with banks to continue finance for BS-IV units till the March-end, Kale said. "We have received some support from states like Punjab, West Bengal and Chhattisgarh. They have assured that they will open even on the weekends to clear the registration process," he added.

Leftover Stock

According to Kale, two-wheeler dealers have the highest BS-IV inventory at around 20-30 days. "The problem across-the-board is in the two-wheeler segment. Comparatively, dealers of passenger vehicles and commercial vehicles are in better shape," Kale said.

When asked about the strategy in a worst-case scenario, Kale said: "If the feedback comes across that they are unable to sell their stock, then we'll have discussion with the OEMs (original equipment manufactures) that how we can jointly come out of this, otherwise the dealers will face huge losses."

FADA would also seek legal remedy, though the Supreme Court has already ruled out any extension on the last date of BS-IV vehicle registrations in the country.

"But, since there are so many new factors, that call (of taking legal recourse) we will take around March 11-12 after consulting our members, but we will have to take action, otherwise dealers will have huge losses," Kale said.

Also Read: Retail Sales In February Point To Automakers Paring BS-IV Inventory

These are the only two options available with FADA right now, he added.

"We will discuss with OEMs how do we do it (sell vehicles). Should we bring in better schemes or the OEMs take the stock back and liquidate it somewhere else," Kale said.

In the current circumstances, any unsold BS-IV vehicle would end up as scrap after March 31. From April 1, only BS-VI-compliant vehicles will be registered in the country.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.