With the Indian automotive industry migrating to the new BS6 OBD-2 norms on April 1, 2023, there has been a concern about the impact on automotive retail. But the industry is confident about its preparedness this time and is best borne out by the trends across CVs.
The commercial vehicle segment is expected to see around a 5 percent price hike as a result of the new emission norms kicking in. But the pace of infrastructure growth, focus on manufacturing, and improvement in the availability of finance are seen as factors that might deter the impact and actually help improve retail sales.
Rajesh Kaul, VP – Sales & Marketing – CVBU, Tata Motors says the new vehicle emission norms are a step in the right direction and the company will use this opportunity to further add value for buyers, “Continuing in FY2024, the infrastructure spending by the government will lead to strong demand across segments and applications. Sectors such as e-commerce, FMCG, construction, mining, steel, and cement will continue to drive demand in the M&HCV and I&LCV segments. Similarly, the SCV segment is expected to continue doing well on resilient demand from agriculture, dairy and e-commerce.”
Manish Raj Singhania, President, FADA too echoed a similar view, “There is no escaping the shift to BS6 OBD-2 norms. There might be some initial pressure on entry-level two-wheelers and passenger vehicles. But for the commercial vehicle segment, I don’t think there will be any major impact. Almost 80 percent of retail sales come from large fleet players. These customers have long-term contracts and purchasing strategies in place. Their purchase decisions do not get affected easily. And for the price hike on CVs, it will not be as significant as it was from BS4 to BS6.”
Vinkesh Gulati, Chairman, Research & Academy, FADA corroborated the scope of limited impact, “The industry was already aware of the timeline for the new norms. As a result, I don’t see much of an impact on the retail performance of CVs. In fact, with most of the CV customers being large fleet owners, the hike in retail price would be quite negligible for them.”
He however cautioned about a marginal dip in Q1 FY2024 due to early buying in Q4 to take advantage of “the depreciation benefit of financial year-end.”