In a judgement that will have far-reaching consequences for many automotive retailers in India, the Supreme Court has allowed a conditional extension for the BS4 sales deadline. As per the order, automotive retailers can only sell 10 percent of unsold BS4 inventory for 10 days post lockdown. The Supreme Court was hearing a last-ditch plea from the Federation of Automobile Dealers Association (FADA) to extend the registration timeframe for BS4 vehicles beyond the original April 1, 2020 deadline, bearing in mind the impact of the nationwide lockdown enforced due to the novel coronavirus (COVID-19) outbreak. Interestingly, Delhi NCR has been left out of the purview of the order meaning no sales of BS4 vehicles can take place in the region post March 31.
Dealers across the country had banked on their ability to clear the leftover stock by March 31, and also offered heavy discounts, but the sharp rise of coronavirus cases across India in the month of March weakened demand in an already-hampered market. The outbreak of the deadly virus necessitated a 21-day nationwide lockdown, which has meant there will be no way for dealers to be able to sell all the leftover BS4 vehicles by the March 31.
This Supreme Court judgment will cause huge losses to dealers across India, as there are still lakhs of BS4-spec vehicles lying unsold. While most vehicle manufacturers transitioned to manufacturing BS6-compliant vehicles by the end of 2019 or start of 2020, dealers still have plenty of leftover stock that hasn’t found any takers at a time when buyer sentiment is seriously weak. At this time, there are still over 7 lakh BS4 vehicles (from the two-wheeler, passenger vehicle and commercial vehicle sectors) cumulatively worth over Rs 6,300 crore that are yet to be sold all across India.
The Supreme Court’s decision comes as a surprise at a time when the government has granted relief in several sectors, including extension of deadline for tax filings and allowing a 3-month moratorium on EMIs for bank loans.
While dealer councils have approached OEMs to ask them to reimburse dealers for the losses they are set to suffer, other solutions have been mooted as well. Dealers earlier considered registering remaining BS4 vehicles in their own name to later sell them off as pre-owned vehicles, but the lockdown means that is no longer a possibility. Some dealers also suggested OEMs take back the remaining vehicles to disassemble them and use them as spares.
We are awaiting responses from manufacturers and dealer bodies. Stay tuned for updates.
from Autocar India - News https://ift.tt/33PlfLl
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