Automakers scurry to liquidate BS-IV stock

Left with little over a month until a new emissions regime is rolled out, India’s automakers are hastening to liquidate whatever inventory of models with older emissions technology. Once April 1 rolls around, no carmaker or dealer will be able to sell any BS-IV emission standard model and only BS-VI emission standard vehicles will be registered at transport offices.

According to industry experts, while the two-wheeler and cars segments are relatively better placed in terms of how much older BS-IV inventory still remains unsold, the ongoing economic slowdown and the resulting collapse in demand has left commercial vehicle makers with a substantial inventory overhang of old BS-IV models: as many as 19,000 trucks and buses.

“Because of the BS-IV to BS-VI transition nobody wants to make BS-IV vehicles and get stuck with them. There is an inventory of 18,000-19,000 trucks in the market. So the truck makers have to first liquidate inventory and then sell new BS-VI vehicles.” Amit Kalyani, deputy managing director, Bharat Forge, told analysts in an earnings call.

The offtake of BS-IV CV models has been affected particularly due to the stubborn demand lowdown afflicting the segment for the past year. For instance, India’s three largest CV makers  — Tata Motors, Ashok Leyland and Mahindra and Mahindra have seen CV sales fall by 24 %, 29 per cent and 11 per cent respectively during the April-January period this year. According to Ashok Leyland officials, the company has a BS-IV inventory of around 6,500 units in total: a manageable level. 

Meanwhile, two-wheeler makers are sitting pretty, with Hero Motocorp CFO Niranjan Kumar Gupta stating that “inventory is a non-issue”. “As far as inventory is concerned, we were down to close to 6 weeks at the end of December. And by January end, we are down to actually 5 weeks. So inventory is a nonissue, and we’re geared for a transition,” he said. TVS Motor Company, which has already stopped making all BS-IV models, also faces no issues with BS-IV inventory. “The BS VI transition, as far as we are concerned, we have completed, and will be supplying only BS VI in February and March,” said KN Radhakrishnan, President and CEO, TVS Motor.

Older BS-IV models on discount
Commercial vehicle players have been pushing sale of older BS-IV models for several months at least, with significant discounts having been offered. While a substantial CV inventory overhang remains, however, the situation is not as bad as during the transition in 2017.