Making BS-IV Compliant Vehicles Since 2010, Says Ashok Leyland
With 5,000 vehicles in the inventory pipeline, Ashok Leyland expects minimal impact of BS-III ban.
With about 5,000 BS-III compliant vehicles in the inventory pipeline, commercial vehicles maker Ashok Leyland Ltd. on Wednesday said the impact of the Supreme Court’s ban on the company will be minimal.
The company has been making BS-IV emission norm compliant vehicles since 2010 and has sufficient capability and capacity to make them, Managing Director Vinod Dasari said in an interview.
Earlier in the day, the Supreme Court barred sale of vehicles compliant with Bharat Stage-III (BS-III) emission norms beyond March 31, in a blow to dealers and automakers who are saddled with an inventory of nearly eight lakh such two-wheelers, trucks and cars.
Here are excerpts from that conversation.
What is the expected impact on the auto industry because of the Supreme Court order?
I think the impact will be quite substantial. I can’t even go on to imagine in. It will impact suppliers, dealers, manufacturers, and customers. There will be some chaos for the next couple of weeks but we will get over it.
Is there a monetary loss the industry will suffer because of this order?
There will be. Not for Ashok Leyland. We will be okay. We have very little inventory to deal with but there are others who are carrying much more inventory, and will face problems.
What is Ashok Leyland’s inventory of BS-III compliant vehicles?
May be less than 5,000 in the pipeline. That will be sold off. Usually most of the billing happens in the last two days in the truck industry. That is expected to be shipped out. So I am not that worried.
Will you be able to roll out BS-IV vehicles by April 1 or will you take some time to make the switch?
No. We have been making BS-IV compliant vehicles since 2010. So, I am ready.
Will the auto ancillary industry also have to change because of this order?
No. We all knew that manufacturing has to happen from April 1 so everybody – supply chain, manufacturers, dealers – was ready. So, no issue. I wish it was told one year ago that you cannot sell. Then we would have prepared for it. How can you say that two days ahead?
This case was going on for some time. There was a divide between the auto industry with respect to implementation of the BS-IV norms...
Well, two-wheelers had a different trajectory. Commercial vehicles were different. Two wheelers had a two-stage switch from 2016 and 2017. For commercial vehicles it was all in 2017.
Do you see the industry now divided on the issue of emission norms?
Industry does not decide the regulations. It is decided by the ministry. At least that’s what we thought. The implementation is also regulated by the government. The industry does not decide. We abide by the regulations. We are told that you can’t make BS-III vehicles after April 1 so we said, ‘Fine, we will not make BS-III vehicles after April 1.’ But suddenly two days ahead, we are told you can’t sell. That’s not what the government had told us.
The submission the industry made was that Rs 25,000 crore have been invested in BS-IV and the biggest hit is on the two-wheeler industry because companies like Hero Honda have a huge inventory pile-up at the dealer end. What happens on that front?
I don’t know about individual companies but we are not going to have that big an impact.
If there are vehicles which are unsold, will the industry take them back?
I don’t know about other vehicles but in a truck, we can change the engine and fix it. It’s not a problem. I am not that worried about it. Whatever is unsold inventory we can convert to BS-IV.
Now the industry is going to jump to BS-VI directly towards the end of 2019-20. How much investment is the industry expecting to make for this transition?
Roughly Rs 20,000 crore.
What are the headwinds for this transition?
Availability of fuel. How do I test my vehicle? There are many other challenges – technology, transition, supply chain etc.
You don’t see any other challenge which can prevent the industry from making the switch to BS-VI?
Now we will talk about this in April 2020.