BS-III decision leaves automakers with “banned’ inventory worth Rs.5,633 crore

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The Supreme Court’s decision to ban the sale and registration of BS-III (Bharat Stage-III) vehicles from April 1 has left automakers in a quandary, with companies left with over 1.4 lakh banned vehicles amounting to Rs.5,633 crore.

Tata-truck
Commercial vehicle manufacturers like Tata Motors might consider export of their BS-III inventory to cut losses.

Showrooms across the country witnessed huge rush in the last week of March, as they offered discounts ranging between 10 and 40 per cent on BS-III vehicles. While they managed to get rid of most of the stock, they were unable to dispose around 1.4 lakh vehicles.

The number of BS-III compliant vehicles with showrooms stood at 8.24 lakh units as of March 20, valued at approximately Rs.20,000 crore. Huge discounts enabled them to sell around 6.8 lakh vehicles, mostly two-wheelers.

Of the 1.4 lakh vehicles unsold, two-wheelers account for more than half, with 76,638 still left with distributors/showrooms. Companies will see a loss of Rs.336 crore if they are unable to red rid of them.

Commercial vehicle manufacturers are the hardest hit, with losses amounting to Rs.5,000 crore. Despite discounts of up to 40 per cent, 43,826 units remained unsold.

The passenger vehicle segment was largely unaffected by the ban as most vehicles were already BS-IV compliant. The three-wheeler industry was left with around 18,000 unsold vehicles worth Rs.221 crore.

No. of units (on March 20) No. of units (on April 1)
Two-wheelers 6,71,000 78,638
Three-wheelers 40,048 18.936
Commercial vehicles 96,700 43,826
Total no. of vehicles 8,07,748* 1,41,400

 

*The figures do not include passenger vehicles.

Popular commercial vehicle manufacturers like Tata Motors, Volvo Eicher, Mahindra & Mahindra, and Ashok Leyland might consider exporting these vehicles to countries which still adhere to BS-III norms. Other options include upgrading existing inventory to meet new norms, but this seems unfeasible owing to the costs involved.

The distress sale of vehicles in the last week of March also left companies with a loss of Rs.1,200 crore.

Read more: Commercial vehicle manufacturers bear brunt of BS-III ban, loss estimated to be Rs.2,500 crore

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