04/07/2020

Ordiate

A Class Of Its Own

Whose BS-IV stock is it anyway, Auto News, ET Auto

FADA, stated that there are 7,00,000 two-wheelers lying unsold throughout India, along with 15,000 Passenger...

FADA, stated that there are 7,00,000 two-wheelers lying unsold throughout India, along with 15,000 Passenger Vehicles consisting of cars and SUV’s, and another 12,000 commercial vehicles.
FADA, stated that there are 7,00,000 two-wheelers lying unsold throughout India, along with 15,000 Passenger Vehicles consisting of cars and SUV’s, and another 12,000 commercial vehicles.

It’s a stark contradiction. BS-IV stock is diminishing even without any actual or physical sale as portrayed by two different documents in the court given by vehicle manufacturers and their biggest ally, dealers.

In a petition filed in the Supreme Court the automotive dealers’ national body, Federation of Automobile Dealers’ Association, or FADA, stated that there are 7,00,000 two-wheelers lying unsold throughout India, along with 15,000 Passenger Vehicles consisting of cars and SUV’s, and another 12,000 commercial vehicles.

In the same document it stated that another 1.05 lakh two-wheelers, 2,250 PV’s and around 2,000 CVs though sold, are yet to complete transactions via their registration at the transport offices throughout different states across India. The cumulative value of the stock was estimated to be in tune of Rs 6,000 crore, FADA had claimed.

While the latest petition filed by the original automakers top body, Society of Indian Automobile Manufacturers’ or SIAM, there are 3,84,640 units sold, but unregistered across India. Of this the highest obviously are the two-wheelers around 3.44 lakh, followed by over 10,000 3-Wheelers, 14,000 PV’s and the commercial vehicle number stand at around 16,000 units, waiting to be registered to close the final ownership contract to customers.

In the SIAM petition, only 18,000 units are left unsold and here too the majority are two-wheelers.~

The court order on the FADA petition came out on March 27, much after the nationwide lockdown starting 22, ideally reiterating that the entire inventory should ideally remain the same, if not close to the numbers submitted. The SIAM petition gives a different picture with almost half of the quantity left across the dealer channels amids the lockdown blues.

In the petition submitted by SIAM, a total of 3,84,000 units across India are sold to customers, but unregistered so far. The automotive industry woes are largely led by Hero MotoCorp with 1.82 lakh of its units left for registration, led by Pune-based Bajaj Auto’s 79,000 units and another 59,000 of Honda Motorcycle and Scooter India. The Chennai-based TVS Motors has the least 9,600 units left to get to the regional transport offices to culminate their registration across its market in India.

Interestingly in the SIAM petition, only 18,000 units are left unsold and here too the majority are two-wheelers numbering around 16-17000 units. Rest are divided in the composite segments like PV, CV and 3-wheelers.

Highlights: FADA & SIAM

Categories FADA SIAM
(Unsold)
2Wheelers 7,00,000 16,000
PV 15,000 1000*
CV 12,000 1000*
(Sold But Unregistered)
2Wheelers 1.05 lakh 3.44 lakh
PV 2,250 14,000*
CV 2,000 16,000*
*Rounded Off Numbers.

Now the mystery remains how come there’s so much difference in the total number of vehicles in two main stakeholders of the Indian automobile industry that are highly connected. In India all the vehicles are sold through the brick & mortar franchise dealership stores as the online or digital sales are almost negligible, almost a trickle.

Going by the Supreme Court order to the FADA petition that has sealed the fate of the automobile industry by allowing only 10 percent of the sales, post the lockdown but that too under its own supervision. According to the latest order of the government post the partial lifting of the lockdown, if staggered manufacturing operations resume, trading and commercial activities are expected to take a long-while. So basically auto dealerships have a little scope of resuming operations anytime soon.

FADA stated that there are 7,00,000 two-wheelers lying unsold throughout India.~

A new petition has been filed by SIAM to aggravate the industry woes as stock worth thousands of crore rupees are stuck in the BS-IV inventory fiasco. The industry was well aware of the March 31, 2020 as the final deadline to sell and liquidate the entire stock, which got hampered by the unexpected lockdown and now there’s much uncertainty over it now.

Meanwhile, Hero MotoCorp and HMSI had also filed separate petitions, besides SIAM and FADA to find a solution to the leftover BS-IV inventory.

The March 27 Supreme Court order allows that only 10 percent of the residual BS-IV stock to be sold after the lockdown deadline comes with no extra timelines to liquidate the unsold inventory. This final order has sealed the fate of the industry and left no room to manoeuvre the existing stock. According to sources, FADA is already working on the finer details to comply with the court order to sell the 10 percent of the BS-IV stock.

While the SIAM and FADA refused to comment on the subject due to its sub-judice nature, the larger issue remains who will bear the brunt of the existing stock.

Some of the manufacturers are contemplating reworking their vehicles for export markets to tide over the financial impact. Basically these vehicles would be retooled to meet the overseas market technical specifications that are quite similar to India. It’s not a big deal. Though the numbers