The deadline to stop the sale of BS4 vehicles was extended recently but on a conditional basis
Hero MotoCorp, the world’s largest two-wheeler manufacturer, has reassured its dealerships across India that they need not worry about leftover BS4 stock. The announcement was made by brand chairman Dr Pawan Munjal while addressing around 1,000 Hero MotoCorp dealers in an interactive digital session. Hero MotoCorp is the first company that has expressed its concern on dealerships with unsold BS4 products.
It was only recently that the Supreme Court of India extended the deadline to sell BS4 vehicles in India on a conditional basis. Under this, dealerships were allowed to sell 10% of their BS4 stock for 10 days from whenever the current lockdown measures are withdrawn. Quite evidently, this will not be a major boon to dealers as many are heading towards inevitable losses that can be recovered only in the long run.
The Indian government’s 21-day lockdown policy extends to April 14. However, since India, as well as other nations, are going through a period of uncertainty, the date could be extended further. The lockdown has brought forward many industry shutdowns. On the other hand, dealerships with a huge BS4 inventory are left with no other option than to hope for a relaxation in the implementation of BS6 emission norms.
As of now, dealerships with unsold BS4 units (be it any vehicle category) are given three directions if they fail to clear them before the deadline: (1) register them beforehand and sell as pre-owned vehicles, (2) consult the parent OEM for a buyback policy and, (3) send them for scrapping as per a proper set of guidelines.
Out of these options, (2) could be the most viable since OEMs can use old vehicles (which are still new on paper) for spares or as development platforms for future models. Still, this will lay a huge burden on OEMs at a time when the market is already slow and heavy investments for new products and BS6 updates were made already. In this regard, Hero MotoCorp is apparently working on ways to “absorb or utilise the old stocks”. The company will be sharing an official statement on this soon.
COVID-19 aka corona virus has disrupted businesses worldwide. Small-scale enterprises have been affected the worst as their chances of making a financial recovery are much lower. If we take India’s automotive industry alone, losses in the range of roughly Rs 1500 crore are happening with each passing day.