The Indian auto industry will go through a major transition in the days to come. While the industry has been preparing for the BS 6 shift for quite sometime now, the recent coronavirus outbreak has added unforeseen burden on auto dealers since the whole country is under a lockdown state.
According to the latest estimates, the unsold two-wheeler inventory of BS 4 vehicles in the country has been calculated to range in between 6,00,000 to 8,00,000 units, and these vehicles are valued at close to ₹3,600 crore.
(Also Read: NGT asks for status of diesel vehicles older than 10 years in Delhi-NCR)
The dealers require at least two functional weeks to clear off the existing BS 4 stocks with the use of discounts and offers intended to boost the sales. But the current lockdown has proved to be a speed-breaker and thus the Indian auto sector is doomed to face a harsh time ahead.
Federation of Automobile Dealers Associations (FADA) had requested to the Supreme Court for an extension of registering BS 4 vehicles in the wake of huge unsold inventory. However, the request has been rejected multiple times. Also, two-wheeler major Hero MotoCorp approached the Supreme Court seeking extension on the BS 4 sales.
If the deadline for the BS 4 vehicle sales/registration isn't extended beyond March 31st, the current stock will be ineligible for sales in the Indian market. One of the options that OEMs (original equipment manufacturers) will be left with is to recall the BS 4 vehicles which will further be exported to the international markets where these vehicle can be sold, like Africa and Nepal. But it goes with out saying that this step will of course come with additional costs.
Moreover, the companies may also recall the existing BS 4 units and stock them for spares, but at the same time, this might not be feasible since a majority of the models see yearly updates and some or the other parts may directly go to waste.
(Also Read: How coronavirus has started hurting car dealers in India)
The OEMs may also update the BS 4 vehicles to the BS 6 emission standards, but it will be a technological challenge, which doesn't seem feasible, at least not when it comes mass market products.