Supreme Court Bans Sale Of BS-III Vehicles From April 1
Automakers had sought nod to sell inventory of BS-III vehicles beyond March 31.
The Supreme Court on Wednesday 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.
The apex court said automobile companies were aware of the deadline and health of public is more important than the sale of existing inventory. It, however, allowed registration of BS-III vehicles bought before April 1.
The Supreme Court gave a clear message that public health is what it cares about, said environmentalist Sunita Narain, who is also a member of apex court-appointed panel that pushed for the rollout of new emission standards from April 1. The court acknowledged the commercial loss but asked why did the companies build the inventory despite knowing the deadline, she said. “It’s a lesson to everybody.”
Shares of bikemaker Hero MotoCorp Ltd. fell 3.15 percent, the most in the S&P BSE Auto Index, as it has more than one-third of all unsold BS-III vehicles. The company fears a loss of Rs 1,600 crore from the ban. Ashok Leyland Ltd. fell 2.78 percent as trucks make up one-tenth of such inventory. That compares with 0.4 percent rise in the benchmark S&P BSE Sensex.
RC Bhargava, chairman, Maruti Suzuki India Ltd., the country’s largest carmaker, said his company will not be impacted by the Supreme Court order. “We stopped production of BS-III vehicles long back.”
Passenger vehicle makers have already switched to BS-IV norms and “we do not expect any big impact” on them, wire agency PTI quoted Shrikant Akolkar, research analyst-auto and auto ancillary at brokerage Angel Broking, as saying.
Dealers have asked the companies to take back unsold inventory, said John K Paul, president of Federation of Automobile Dealers Associations. It’s going to be “tragic for dealers”, as many of them still have a huge BS-III stock and will feel the impact for months, he said.
Like Maruti, Ashok Leyland Ltd., has also been manufacturing BS-IV compliant trucks since 2010, said its Managing Director and SIAM President Ashok Dasari. “I don’t know about individual companies but we are not going to have that big an impact,” he told BloombergQuint over the phone. The shift to BS-VI by 2019-20 will cost the industry about Rs 20,000 crore, he added.
Automakers had objected to an October 2016 order of the apex court-appointed Environment Pollution Control Authority (EPCA). It sought implementation of a government notification to switch to new emission standards – Bharat Stage-IV (BS-IV) –from April 1. Bajaj Auto Ltd. is the only automobile company to have backed the EPCA’s decision.
The 2015 notification of the road transport and highways ministry made it mandatory for automakers to switch to BS-IV norms from April 1, but didn’t say whether the sale of BS-III inventory would be allowed.
The Society for Automobile Manufacturers (SIAM) had sought more time to sell BS-III vehicles arguing that the notification barred production, not sale, of such vehicles after April 1. The government supported the argument.
According to data submitted by SIAM to the apex court, the inventory of two-wheelers stands at 6.71 lakh units, of which Hero MotoCorp Ltd. alone accounts for 2.97 lakh as of March 20. Inventory of trucks stands at 96,000 and cars at 16,000.