Tuesday, January 31, 2023
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Covid-19 lockdown blocks sale of more than Rs 6,000 crore-worth BS IV vehicles

The government had mandated that only BS-VI-compliant vehicles could be sold and registered in India from 1 April 2020.

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New Delhi: Nearly 15,000 passenger cars, 12,000 commercial vehicles and 7 lakh two-wheelers adhering to BS-IV emission norms remain unsold in the country as of last week.

The figures were declared by the Federation of Automobile Dealers Association (FADA) in an appeal to the Supreme Court on 27 March about the unsold inventory, valued at more than Rs 6,000 crore.

The government had mandated that only BS-VI compliant vehicles could be sold and registered in India from 1 April 2020. BS-VI have comparatively stricter emission norms compared to BS-IV.

The Supreme Court in its order gave the automobile dealers a 10-day window to sell BS-IV-compliant vehicles after the lockdown is lifted. The court, however, did not allow sales in Delhi and the National Capital Region.

The lockdown to control the spread of the novel coronavirus came into effect from the midnight of 24 March, effectively robbing automobile dealers of a week’s time for clearing out their BS-IV stock. However, some online sales may have taken place during the period. FADA is in the process of collecting the latest data from its members, said the association.

According to the current plan, the lockdown will be in effect until 14 April 2020.

Also read: Here’s how the Covid-19 pandemic lockdown can be India’s last

What the court ordered

Apart from the extension on the sale period, the Supreme Court allowed for the registration of the sold but unregistered vehicles until 30 April 2020. FADA estimated that more than one lakh two-wheelers and more than 2,250 passenger cars and 2,000 commercial vehicles with BS-IV norms were sold but not registered.

The 2019-20 financial year has been a difficult one for the auto industry, which sustained sharp drops in production and job cuts as demand for passenger cars and other commercial vehicles remained muted.

Care ratings, in a note dated 31 March, pointed out that while passenger vehicle sales in absolute numbers have contracted by 11.4 per cent in the April-February period, commercial vehicle sales have contracted by 23 per cent and two-wheeler sales by 12 per cent.

It further said that the 10-day extension granted by the Supreme Court is not likely to boost the industry given the current economic situation due to the Covid-19 pandemic.

“The buying sentiment post the lockdown period… is likely to be low and consumers will be cautious in spending, particularly on luxury/big-ticket items, thereby not meeting the desired objective to clear the BS IV inventory with the dealers,” the note said.

Also read: Tata Motors to spin off cars unit to seek strategic allies


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