When it comes to buying a car in India, it is considered to be the second most important purchase for a family after property/house. With the rise in the Indian middle class, the new car sales in India has gone up by over 15% year-on-year, with about 6 cars being bought every minute in the country. India is a price sensitive market and all segments below Rs 12 lakh is in huge demand. After the implementation of Goods and Service Tax (GST) in 2017, the frequent change of taxes for cars did give carmakers in India some headache and slowed down the sales but the last 6 months have been smooth. The financial year 2017-18 saw Indian automakers moving to BS-IV emission norms, accepting the losses caused by the confusion over selling date of BS-IV powered vehicles and we also saw some major discounts in two-wheelers and Commercial Vehicles in the last few days of March 2017.
However, this will not happen when the industry adapts to BS-VI norms in 2020. Do not expect any huge discount on cars or two-wheelers as the government and the automobile industry is positive about the rollout of BS-VI vehicles in India ahead of the 1st April 2020 deadline. However, the shift to adapting to clean fuel requires huge investments and expect the prices of cars, bikes, scooters and commercial vehicles to go up at least by about 10-12% depending on the segment. While petrol powered vehicles will see the marginal increase in car prices, diesel-powered cars and SUVs will be affected the most.
Carmakers including Maruti Suzuki and Hyundai on several occasions had confirmed that its entire fleet will move to BS-VI and the companies are also confident of BS-VI fuel availability. Government-owned oil companies are investing heavily to upgrade its oil refineries to rollout BS-VI fuel on time. Japanese automaker Toyota did confirm that the cost of the cars will go up with being BSVI compliant and the company will pass down the burden of new costs to its customers. The other big reason to buy a new car before April 2020 is that the value of your existing car is further going to go down with BS-VI kicking in. The resale value of an existing BS-IV car will reduce with new norms in place.
Unlike the confusion about manufacturing date and selling date that took place during the implementation of BS-IV vehicles that saw massive discounts on vehicles, nothing of this sort is expected to happen in April 2020. Government’s notification is very clear that carmakers and two-wheeler manufacturers can sell its existing BS-IV stock cars for up to 3 months post the 1st April 2018 deadline and commercial vehicles will get 6 months to ensure that its body is built and the vehicle is registered.
There is a slight possibility that at the dealership level there are various car discounts and bike discounts across the country for three months post-April 2020 for clearance of existing BS-IV vehicles. But is not expected to be huge as carmakers will have the production plan of its respective vehicle ready to minimize its loses.
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