Vehicle dealers heave a sigh of relief

Extension of deadline to sell and register Bharat Stage-IV vehicles

Vehicle dealerships have heaved a sigh of relief as the Supreme Court has extended the March 31 deadline to sell and register Bharat Stage-IV (BS-IV) vehicles which were idling in their inventory, due to customers preferring BS-VI vehicles, slack demand and the standstill that has arisen due to COVID-19 threat.

Approximately seven lakh two-wheelers, 15,000 passenger vehicles (cars and SUVs) and 12,000 commercial vehicles manufactured as per BS-IV specifications have not been sold yet. The apex court permitting sale of 10% of the stock (70,000 two-wheelers, 1,500 passenger vehicles and 1,200 commercial vehicles) would bring some respite to dealers who are struggling to pay even salary of workers in the wake of the nationwide shutdown, said Rajwanth Ben, who co-owns a dealership.

The court ruled on Friday that a BS-IV vehicle sold before March 31 can be registered after the lockdown was withdrawn, extending the deadline to April 30. Dealers, except in Delhi-NCR can sell 10% of their existing stock of unsold vehicles once the lockdown is lifted.

Faced with unsold inventory of BS-IV vehicles, many car dealers were selling vehicles at throwaway prices, offering discount of over 50%, said Azad Harry Pothen, a dealer. “Dealerships in Kerala were already hit by plummeting sales due to the flood of 2018 and 2019. Faced with the COVID-19 crisis and the resultant uncertainty, purchasing a new automobile would be the last priority of most people,” he said.

Most dealers had reduced their inventory of BS-IV vehicles since December 2019, as BS-VI emission norms were to take effect from April 1. They could have sold all these vehicles had it not been for the viral outbreak. Dealers will find the going tough if the volume of sales tumbles, since most get 3% commission on sale of cars. Of this, many forego up to 1.50% by way of discounts and other means. “We are banking on discerning customers who are socially and environmentally conscious to purchase BS-VI vehicles which pollute much less than their BS-IV counterparts. Only that they cost marginally higher. Two-wheeler manufacturers will be more affected than car makers by the new emission norms,” Mr Pothen said.

With the COVID-19 outbreak coinciding with the end of the fiscal, paying salary seems to be a bigger worry for dealers than meeting their monthly target. “The salary of our workforce alone works out to around ₹50 lakh. While we can somehow manage the salary for March, uncertainty looms over salary for April. While we do not have any BS-IV vehicles in our inventory, those who have them would have to sell them as used vehicles or rely on them for spare parts,” Mr. Ben said.

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Printable version | May 25, 2020 1:46:07 PM |

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