The Coronavirus outbreak couldn’t have hit India’s auto sector at a worse time. The sharp drop in demand makes it harder for companies to sell their outmoded BSIV stock before the Supreme Court deadline of March 31.
CNBC-TV18 learns there are at least 6.5 to 8 lakh BSIV two wheelers in stock with dealers. Passenger vehicles and commercial vehicles stock levels of BSIV are much lower at around 17,000 and 7000 respectively, industry sources say.
Sale and registration of BSIV vehicles have to be done by March 31. To comply with the apex court’s order, several transport departments have asked for BSIV registration to be completed even before the deadline.
State Transport Departments have laid out different dates ranging from 15th March to 29th March for dealers to complete registrations, leading to confusion in the industry.
The Society for Indian Automobile Manufacturers has now moved court asking it to direct all State Transport Departments to allow sale and registration of BSIV vehicles till March 31.
Speaking to CNBC-TV18, Rajan Wadhera, President, SIAM said, “Consequent to the spread of Covid-19, the footfalls and enquiries, at dealerships are reducing very fast. We would request all RTOs across the country to allow registration of BSIV vehicles till 31st March 2020 and not advance the date”.
A senior industry executive said that financiers were witholding loans for BSIV vehicles and people too are scared of visiting showrooms because of the Coronavirus outbreak.
According to the Federation of Automobile Dealers Association, counter sales have fallen by 60-70 percent across dealerships in the last few days.
Ashish Kale, President, FADA said, “We have lost 20 days. Walk-ins have dropped and state governments have also asked showrooms to be shut down in parts of Pune, Orissa and Tamil Nadu. The situation has worsened in the last three to four days”.
While all OEMs have attractive discount schemes for BSIV vehicles, the offers will have little impact if customers stay away due to the Coronavirus outbreak, said a dealer whom CNBC-TV18 spoke to.
This is the reason why the automobile dealers association has also moved the apex court, requesting it to give dealers a grace period till 31st May, to sell and register old BSIV stock.
Members of the dealers association say that the market has been impacted due to reasons beyond their control.
Speaking to CNBC-TV18, Vinod Aggarwal, the MD and CEO of Volvo Eicher Commercial Vehicles, said that VECV’s inventory levels were very low and manageable but admitted that confusion over BSVI deadline and the fallout of Coronavirus has impacted demand. He sees persisting near term .
He said, “We will get to know the impact of Coronavirus on CV sales in April. Economic activity has definitely been affected due to the slowdown and the service industry has been badly impacted as well”.
Most vehicle manufacturers have assured dealers that all stock would be liquidated till 31st March, but concerns remain. As per directions of some transport departments, unsold BSIV stock would have to be scrapped.
CNBC-TV 18 has learnt from sources that companies may take back unsold vehicles and try to export them to Bangladesh, Nepal and Sri Lanka, where BSIV norms are still applicable. However, these neighbouring markets though are also facing a slowdown.
As a last resort, dealers may be forced to buy and register unsold BSIV vehicles in their own stock before 31st of March and then sell them as second hand vehicles after 1st of April, say sources.