To extend the deadline to sell BS4 two-wheelers and four-wheelers in the country, FADA has already reached out to the Supreme Court
The corona virus aka COVID-19 pandemic has definitely given global businesses a hard blow. Many nations, including India, have announced complete or partial shutdowns in their states or provinces. The Indian automotive industry is also going through rough times like never before with back-to-back factory shutdowns. In fact, the latest data shows the market is witnessing losses in the range of Rs 1,500 crore per day!
The virus outbreak came at the same time when dealerships of multiple brands and vehicle categories were desperately trying to clear off their remaining BS4 stock. As per rules, no BS4 vehicle can be legally sold or registered in the country post 31 March 2020. With no showrooms open at the moment and no potential buyers leaving their home, the leftover BS4 units see no chances of coming down in number.
In a recent development, it was assessed that the unsold BS4 inventory in the two-wheeler category alone accounts to more than Rs 2,500 crore. In the current scenario, it is very unlikely that dealerships would be able to sell at least a portion of the figure before 1 April 2020. FADA (Federation of Automotive Dealers Associations) has already reached out to the Supreme Court of India to seek an extension to the deadline.
The previous year has not been a good one for the Indian market and many OEMs had reported poor performance on the sales chart. The start of 2020 seemed hopeful even though the burden of updating to the new BS6 emission standards remained on the shoulders. In just a few weeks’ time from then, the outbreak of COVID-19 in China started reflecting on the supply chain of components for automakers operating in India.
What started with extended waiting periods and sluggish production rates has now reached the state of complete shutdowns. As there is a lot of uncertainty on the extent of the outbreak, it is unknown as to when manufacturers would be able to open their facilities and continue operations. On the bright side, Chinese factories are gradually opening as the damage of the virus is being subdued. In other words, the Chinese automotive supply chain could become 100 per cent functional by the time Indian OEMs are ready to commence business.
The Indian government is taking all the necessary precautions to prevent the outbreak from reaching ‘Stage 3’. The losses are intimidating but the drastic measures undertaken at present are for the best.