The Supreme Court of India today refused to give an extension to sales of BS IV vehicles in the country, for which the last date is March 31, 220. The new and stringent BS VI emission norms are mandated to be implemented from April 1, 2020.
The dealer fraternity and the government had earlier asked the Supreme Court for an extension for unsold BS IV vehicles after April 1, 2020, as the domestic industry is facing a significant slowdown in both wholesale and retail. At present the overall sales for the auto industry in January 2020 was 1,739,975 units (-13.83%), with passenger vehicles at 262,714 units (-6.2%), commercial vehicles at 75,289 units (-14.4%), three-wheelers at 60,903 (12.69%) units and two-wheelers at 1,341,005 units (-16.06%).
In view of the prolonged sales slowdown and rising inventory concerns, automotive dealer body FADA, which represents over 25,000 dealers across the country had in December 2019, approached the Supreme Court to allow some relief for the transition to the BS VI emission norms. The current situation at the dealer level seems to be a bit of a challenging task, with two-wheeler and commercial vehicle inventory to be a "case of concern". In contrast, passenger vehicle inventory is at a comfortable level and for some OEMs and models there seems to be zero BS IV inventory at the dealer level.
Given today's judgement by the Supreme Court, the situation would need some positive momentum for the consumer sentiment, an aggressive marketing push by the dealer fraternity or heavy discounting to help elevate the BS IV stocks or the dealerships will see massive hit on their revenue.
While at present the situation may not see a knee-jerk reaction, but with each passing day, and by March 15, the inventory level reduction would remain the key target for both OEMs and dealers.