The Centre did align with vehicle manufacturers concerns regarding more than 8 lakh automobiles becoming redundant within guidelines of implementing BS-IV. But, the Supreme Court isn’t having any of that and upholds citizen’s health as more important than commercial interests of the automobile industry. Thereby, April 1, 2017 onward, registration and sale of new BS-III fuel compliant vehicles will be prohibited.
The proposition was to stop manufacturing of BS-III vehicles and facilitate sales of all existing unsold BS-III vehicles. Of course, that isn’t happening, which means manufacturers are keen to let go of as many of the vehicles before the FY ends. That’s 3 proper days of sales and discounted listings.
Manufacturers have long been aware of the upgrade required but manufacturing activity wasn’t halted by many. In recent years, oil refineries have spent over Rs 30,000 crore to make a cleaner new fuel that’s going to be important in thwarting air pollution.
Permitting sale of BS-III vehicles frustrates the government’s efforts in checking increased pollution levels. That results in 8.2 lakh vehicles working against progress.
The manufacturers recounted having been allowed to sell existing stock with old emission norms on two occasions previously when the country moved up from BS-II and BS-III in 2005 and 2010.
The required changes warrant expenses by manufacturers to be compliant with BSIV norms, and GST implementation. The inventory pileup isn’t a positive outlook, and it’s also the end of the 2016-17 financial year.
The Society of Indian Automobile Manufacturers (SIAM) made available manufacturing and sales data to highlight the BS-III stockpile. The majority of unsold vehicles are two wheelers, and they may need to be exported to countries that currently allow sale of such vehicles. SIAM highlighted that production was increased in January 2017 because demonetisation had a negative impact on production output since two months prior when demonetisation had been announced.
Mr. Vinod K. Dasari, MD and CEO, Ashok Leyland Ltd said the company isn’t going to have to resort to huge write offs and is being impacted minimally having manufactured BSIV compliant vehicles since 2010. BS IV Commercial Vehicles can’t run properly on BS III fuel and non-availability of the right fuel across India prompts customers to use BS III vehicles.
Most of Ashok Leyland’s vehicles in the pipeline are already sold, and some are yet to be delivered as per the orderbook. Of the remaining vehicles, some will be exported to markets that follow BS III norms. If any vehicles still remain unsold, those will be upgraded to BS IV at minimal cost. Till date, Ashok Leyland has sold about 50,000 BS IV vehicles to customers who have access to BS IV fuel.
Ashok Leyland sold 18,682 units in March 2017 compared to 16,702 units during March 2016. Total sales in FY2017 was 145,066 units, up from 140,457 units sold in FY2016.
Mr. Vinod K. Dasari – CEO and MD, Ashok Leyland said the company registered 12% growth in March 2017 and 3% growth through FY2017 on the back of product launches, dealership expansion in North and East, an assembly unit in Dhaka and offices in Dubai and Bangladesh. The industry has been affected by the mandatory BSIV shift. Ashok Leyland is working on minimizing the impact of this decision.
Mr. Vinod K Dasari who also serves as President, Society of Indian Automobile Manufacturers (SIAM) says the Indian auto industry will abide by Supreme Court orders regarding BSIV.
Indian auto industry has been working actively on BS4 manufacturing since 2010 but nationwide sales has been thwarted owing to unavailability of BS4 fuel. The industry is complaint to emission norms and government regulated date of ‘Manufacturing’. Running a BS4 vehicle on BS3 fuel can cause severe damage to some vehicles.
While BSIV vehicle manufacturing has been an area of focus, BS4 fuel availability has not recieved the same push in the last 7 years. As such, the sudden compulsion causes undue stress on the industry, and also causes loss of jobs. The auto Industry spends a fortune in R7D, technology, and implementation, and requires a stable and predictable policy that encourages long term planning and investment.
While BSIV aims at tackling air pollution, a proactive measure that has the same effect is to scarp old vehicles as they are big time pollutants. Removing them from our roads would have a positive effect on air quality. Indian auto industry is also working with the government for the fastest migration to BS6 (in 3 years) by wholly skipping BS5.
Though stopping sales of BS III vehicles was made mandatory only on 1st April, 2017, among other manufacturers, Toyota Kirloskar Motor (TKM) stopped BS 3 vehicle production on 1st April, 2016, which helped the company stop sales of such vehicles much ahead of the decided deadline of 1st April, 2017. As a result, Toyota India dealers have felt no impact of the latest sales limitation.
Toyota Kirloskar Motor is concerned about rising pollution levels and supports the Government of India’s initiative. All TKM vehicles being sold in India are BS IV compliant. The company recommends the government also does something about phasing out BS I & BS II vehicles.
Toyota India is future ready to align with BS VI technology by 1st April, 2020. TKM is confident that the Oil & Gas Industry will provide BS VI fuels before 2020 at least 6 months in advance so the auto industry can synchronise its production of BS VI compliant vehicles . To grow as an automotive manufacturing hub for cleaner vehicles, there needs to be a concerted effort from the Government, Oil & Gas Industry and Automotive Industry to work closely.
Initially, implementation of Bharat Stage IV (BS IV) emission standards for vehicles from April 1, 2017 provided for permitting sale and registration of Bharat Stage III (BS III) vehicles manufactured prior to April 1, 2017 even after the date. However, the Supreme Court of India on 29th March said this will not be allowed. This, despite the government explaining to Supreme Court through the Solicitor General that vehicle manufacturers should be allowed to sell BS III vehicles already manufactured. This is what has been followed when the Indian auto industry shifted through prior Bharat Stage norms.
Mahindra was looking forward to that but will now have to follow the new law. M&M had made available BS IV models as per Government of India notifications as required, and is ramping BSIV production. Mahindra tried to liquidate as much of its BS III inventory as possible by March 31, 2017 and looks to minimize the effect of this on its financials.
Nishant Arya, Executive Director of JBM Group says the company has moved to BS IV emission norms for all its products, including intra-city buses. Manufacturing at present includes CNG and Diesel products, with electric buses soon joining the production line. CITYLIFE CNG and CITYLIFE Diesel buses are BS IV compliant, and ECOLIFE electric bus is emission free. Its auto component segment has been manufacturing BS IV compliant products for all clients since some time now.
BharatBenz has nothing to worry about with 1,000 BS-IV trucks on Indian roads already. The 1,000th BharatBenz BSIV truck was handed over to a customer by Autobahn Trucking, which operates three BharatBenz dealerships in Kerala. Kerala moved to BSIV in November 2016.
Erich Nesselhauf, Managing Director and CEO, Daimler India Commercial Vehicles says the company has worked relentlessly for over a year to be fully BS-IV ready on 1st April, from product development through aftersales.
DICV’s complete BharatBenz range of trucks (9 to 49 tonnes) has been offered as BS-IV variants since August 2015. As such, by the Indian deadline of implementation, BharatBenz BS-IV trucks have clocked up more than 200 lakh kilometres.
BharatBenz BS-IV vehicles also accept BS-III fuel, if required. BharatBenz BS-IV vehicles uses a system based on SCR technology used in many world markets in the last ten years.
Nesselhauf further added, the Supreme Court decision reassures DICV’s belief that industry interests must align with interests of the society. BS-IV norms bring in improvements in terms of air quality to benefit people, and the environment.
BharatBenz made a strategic decision last year to focus on BS-IV vehicles. The company was able to phase out BS-III vehicles in its business system and made the switch to produce only BS-IV vehicles in March, as per plan and requirement. This week, its all-new range of BharatBenz trucks featuring clean and fuel-efficient BS-IV technology package is being launched.
While demonetisation announced in the last quarter of 2016 contracted CV sales and growth, expected Bharat Stage (BS)-IV from April 2017 did encourage pre-buying in Q4 FY2017. In January, Subrata Ray, Group Head, Corporate Ratings said the M&HCV (Truck) segment is likely to register 7-8% during Q4 FY2017, as impact of demonetization is offset by pre-buying owing to BS IV implementation. Pre-buying will in turn contract sales volumes in H1 FY 2018.
Globally, Indian auto industry has been the fastest to upgrade its emission norms. Europe took 13 years to implement Euro 4 stage. India took 10 years to introduce BSIV emission norms. India will jump from BSIV to BSVI Emission norms in a mere three years (2020).
Adaptation of BS-IV standards are likely to have a neutral impact on the Indian auto industry. In the passenger vehicle segment, most manufacturers shifted to BSIV manufacturing well within time and will not be impacted adversely.