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  1. Ban on BS III vehicles: As Supreme Court emission order hangs fire, automakers set to take big hit

Ban on BS III vehicles: As Supreme Court emission order hangs fire, automakers set to take big hit

With the Supreme Court (SC) set to deliver a verdict on a ban on vehicles that are compliant only with BS III emission norms on Wednesday, automakers fear they will lose several thousands of crores on their inventories .

By: | New Delhi | Updated: March 29, 2017 7:30 PM
Hero MotoCorp estimated it would incur losses of close to R1,600 crore if the existing stock was left unsold. (Reuters)

With the Supreme Court (SC) set to deliver a verdict on a ban on vehicles that are compliant only with BS III emission norms on Wednesday, automakers fear they will lose several thousands of crores on their inventories unless they are allowed to sell existing stock even after April 1. On Tuesday, the apex court reserved its order. An estimated 96,000 trucks that are BS III-compliant are lying with dealers and at an average price of R25 lakh are valued at around R25,000 crore. Moreover, close to 7 lakh two-wheelers — valued at around R2,500 crore — are also in showrooms and in factories. Hero MotoCorp estimated it would incur losses of close to R1,600 crore if the existing stock was left unsold.

On Tuesday, automobile industry body SIAM urged the apex court to give automakers 12 months time to dispose of vehicles with BS III-compliant engines. Lawyers for SIAM argued dealers would need least six to eight months to sell the inventories. The Environment Pollution Control Authority had moved the apex court on Friday to stop the sale of BS III-compliant vehicles from April. The government, however, has sought time for inventories to be disposed of. According to a notification of the ministry of road transport, automakers must adhere to BS IV emission norms from April 2017, but dealers will be allowed to sell the inventory of BS III vehicles.

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Commercial vehicle manufacturer Tata Motors has said it is geared up to produce BS IV-compliant vehicles but would like dealers to be allowed to sell the inventory even after April 1. Solicitor general Ranjit Kumar argued that manufacturers be permitted to sell BS III vehicles till stocks last since it was not possible to make BS III-compliant vehicles into BS IV-compliant ones. In the passenger vehicle segment, most players like Maruti Suzuki, Hyundai, Honda and Toyota have virtually no inventory of BS III vehicles.

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The Bharat Stage IV emission norm has been in place since 2010 in 13 cities across the country. Japanese carmaker Toyota also urged the government to devise a policy to scrap the BS I and BS II vehicles. “All our vehicles currently being sold in India are BS IV-compliant. Here, we would urge the government also to put in place an enabling framework to phase out BS I & BS II vehicles,” the company in a statement. Two-wheeler manufacturer Bajaj Auto had also made a similar plea last week for a ban on the sale of BS III vehicles in the domestic market to curb the rising pollution levels. According to the company, the time for phasing out the BS III vehicles ends on April 1 and no extension should be given to any automaker.

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