According to a recent order by the Supreme Court of India, automobile dealerships will be able to sell BS-IV vehicles for a 10-day period after the 21-day coronavirus lockdown is lifted. However, the order further states that 10% of the BS-IV inventory will be allowed to sell and the 10-day sales extension will not be applicable in Delhi/NCR. We spoke with Nikunj Sanghi who has served as the president of the Federation of Automobile Dealers’ Association (FADA) to know if the order will, in fact, be helpful to dealers.
One big issue of the whole BS-IV inventory scenario are the vehicles that have been sold but not registered, Sanghi says, adding that people are mostly focussing on the 10-day extension but as a matter of fact, the 30-day extension for registration of BS-IV vehicles is a big relief to customers and dealers.
The apex court has extended the last date of registration of BS-IV vehicles to 30th April. The last date under the previous mandate was 31st March.
Dealers could so far not receive payment until and unless a newly sold vehicle was registered, which further created problems.
About the 10% inventory sales, Sanghi opines that not being able to liquidate 90% of the BS-IV stock will create a sizable burden on the dealers and will be a question that lingers in the industry for some months to come.
Businesses at the dealership level will not be able to absorb the loss of 90% unsold stock and many of them would have to fold. And hence, they will have to reach out to OEMs for assistance.
FADA on Tuesday sought modification of the Supreme Court’s October 24, 2018 order that prohibited sale and registration of BS-IV compliant vehicles from 1 April 2020. The dealer’s body had said that they might be unable to liquidate Bharat Stage-IV vehicle inventory before the new emission standards take effect on 1 April, due to the impact of Covid-19. And hence, the body had asked for an extension for BS-IV vehicle sales till May 31, 2020.
A bench of Justices Arun Mishra and Deepak Gupta, which heard the matter on Friday through video-conferencing, made it clear however that no BS-IV vehicles will be allowed to be sold in Delhi-NCR from April 1, 2020.
Last week, FADA clarified that automobile dealers across India are facing a tough situation as BS-IV inventory worth Rs 6,400 crore is still lying unsold due to the impact of Covid-19 that has forced a nationwide lockdown. The auto dealers’ body had said that unsold BS-IV inventory would lead to financial hardships for the dealers, and “even threaten the existence of their business”.
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