Two-Wheeler Dealers Worried Unsold BS-IV Inventory Will Turn Into Scrap
Two-wheeler dealers may have to send their unsold inventory to scrap amid poor demand and registration deadlines by states.
As the deadline for transition to stricter emissions standards nears, India’s two-wheeler dealers are sitting on the biggest inventory of vehicles complying with older norms that would be as good as scrap after April 1.
Some regional transport offices across India have hinted that they won’t register vehicles complying with the older Bharat Stage-IV emission standards from March 20, Vinkesh Gulati, vice president of Federation of Automobile Dealers Associations, told BloombergQuint over the phone. Poor footfalls at dealerships have only compounded fears, he said.
According to the automobile dealers’ body, two-wheeler sellers face challenges, with inventories of up to 25-30 days, while the situation is under control for those selling passenger cars and commercial vehicles. Unsold BS-IV vehicles after March 31, according to the norms, would end up as scrap and only BS-VI vehicles will be registered.
Dealers had about 7 lakh units of BS-IV two-wheelers costing about Rs 55,000 apiece on an average as of March 1, according to FADA. Makers of cars and utility vehicles were much better placed, data with the dealers’ lobby showed, with 50,000 units costing an average of Rs 6.5 lakh per unit.
India’s automakers have been struggling to push sales since the Diwali festive season two years ago. Increased upfront insurance costs and fuel prices, followed by a broader economic slowdown, deterred buyers. Discounts failed to lift demand, forcing companies to cut production as inventory piled up at dealerships. This culminated in the worst slump for the automobile sector in over two decades. And transition to BS-VI has only amplified the problem.
Higher inventory of two-wheelers is a concern right now, and we’re coordinating with the dealers and regional transport associations to ensure timely phase-out of BS-IV inventory.Vinkesh Gulati, Vice President, FADA
The Gujarat government said it won’t register BS-IV vehicles after March 25, Nikhil Chawla, a two-wheeler dealer from the western state, told BloombergQuint. “I’m not worried as my inventory is low, but the situation may not be the same for others.”
“The higher volumes of doing an entry on the Vahan database (of Ministry of Road Transport and Highways) has slowed the process, and that’s why certain RTOs have advanced registration dates because they’ll need time,” Chawla said, adding that he’s helping other dealers with higher BS-IV inventory to liquidate stock.
A two-wheeler dealer in Allahabad, Uttar Pradesh, who has an inventory of 1,400 BS-IV motorcycles, is worried. The dealer, who spoke on the condition of anonymity, said that if registrations aren’t allowed till March 31, he may not be able to liquidate his inventory fully.
A few states have, however, come forward to ease the situation. The Regional Transport Officer of Maharashtra, following requests from auto dealers in the state, has agreed to work on weekends to help clear inventories, Pritam Gandhi, a dealer for Hero MotoCorp Ltd. in Mumbai, told BloombergQuint. Gandhi’s Fort Point Automotive is sitting on an unsold inventory of 400 BS-IV vehicles.
FADA’s Gulati said the dealers’ body is also engaging with banks to help finance purchases of BS-IV units till March-end.
Seeking Supreme Court Relief
The body, whose earlier appeal to postpone the BS-VI deadline was rejected by the Supreme Court last month, moved another appeal on March 17 to permit sale and registrations of BS-IV vehicles till May-end.
(Updated to incorporate FADA’s new plea to relax the BS-IV deadline)