Auto Dealers Saddled With BS-III Vehicles Worth Rs 5,000 Crore: FADA
With the implementation of BS-IV norms across the country starting 1 April 2017, many automobile manufacturers still have unsold vehicles worth Rs 4,500 crore lying at their dealership outlets that are no longer compliant with the latest emission norms
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With the implementation of BS-IV norms across the country starting 1 April 2017, many automobile manufacturers still have unsold vehicles worth Rs 4,500 crore lying at their dealership outlets that are no longer compliant with the latest emission norms.
Last financial year has been reasonably good for the auto industry owing to favourable monsoons after two consecutive years of drought and positive consumer sentiments. We witnessed upward growth even though the industry was marked by disruptions such as demonetisation in November affecting the rural market and thereafter Supreme Court proceedings resulting in the ban on sale of BS-III vehicles from 1 April 2017. Had these roadblocks not emerged, the overall volumes would have been much higher. This financial year will also be reasonably good for the auto market because of normal monsoons prediction and forward looking policies by the government.
This is one of the disruptions that automobile dealers are prepared to deal with. Although these cab aggregators may not be denting sales at the retail level, there would be changes in the buyer profiles. So, instead of a customer buying for personal usage, there maybe someone who is walking in (at dealer outlets) for commercial purposes. So the vehicle registrations will not be significantly impacted.
At present, there is unsold inventory worth more Rs 5,000 crore at the dealers’ end. Out of the total inventory of around 100,000, vehicles, around 40,000 are commercial vehicles followed by PVs and two-wheelers. The Supreme Court order has led to a lot of confusion. FADA is in talks with SIAM and dealers are also individually talking to their OEMs. We are yet to come out with a resolution. Every state is interpreting the order in its own way.
Not really. We don’t see any significant impact of e-commerce players. While customers may make enquiries online, they would definitely like to have a touch-and-feel experience of the vehicle. For that, he needs to go to a dealer.