Supreme Court bans BS-III Vehicles; Manufacturer to incur Heavy Losses

Supreme Court has announced the ban of sales and registration of Bharath Stage-III vehicles quoting, “health of citizens is far more important than commercial interests.” BS-III vehicles will not be permitted from 1st April 2017.

Post announcement, the vehicle manufacturers have slashed the prices of the vehicle in order to liquidate the stock. The auto industry has a total of 8.24 Lakhs of new BS-III unsold vehicles. India’s largest two-wheeler manufacturer Hero Motocorp shares declined by 3% and CV manufacturer Ashok Leyland’s shares dipped by 6%, post the announcement by Supreme Court.

Two-wheeler majors Hero MotoCorp, HMSI, Bajaj Auto and Suzuki Motorcycle are giving raining discounts to woo buyers for their BS-III models starting from Rs.22,000/-

Roy Kurian, Vice President Sales & Marketing, Yamaha Motor India Sales Private Limited said “It a very strict and unexpected call from the Supreme Court. We were preparing ourselves accordingly. However, we don’t have enough inventories. We must be having a stock of 4-5 days. We already have taken action on this, in the month of January where  80-85 percent stock sold were BS-IV vehicles.”

According to sources in the auto industry, there are 75,000 unsold BS-III commercial vehicles, 16,000 passenger vehicles, 40,000 three-wheelers and 6.71 lakh two-wheelers. Hero Motocorp alone has over 3.28 lakh units of BS-III vehicles in its inventory which is estimated to be over Rs.1,200 crore.

Hero MotoCorp and TVS moved to 100 percent BS-4 production this month. It is the CV makers who continued manufacturing BS-3 vehicles in March, in anticipation of strong pre-buy and expected to continue selling them in April and beyond.

Pawan Munjal, Chairman, Hero Motorcorp said, “I welcome this move by Supreme Court in the interest of public health.  Recognising the need of the hour, we have reduced our BS III inventory significantly in the past few months with the aim to minimise our stakeholder losses.”

According to one brokerage tracking the automobile industry, actual vehicle population affected by the ban is  mere 8,24,278 out of 238,56,956 produced between April 2016 and February of this year.

Supreme Court bans BS-III Vehicles; Manufacturer to incur Heavy Losses
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