What came as a relief for the auto industry, the Supreme Court today eased the March 31 deadline for the sale of BS4 vehicles in India, giving an extension of 10 days, post the end of the lockdown period. Given the special circumstances, where dealerships are facing a tough time clearing their BS4 stock due to the coronavirus lockdown, the apex court has ruled that only 10 per cent, of unsold BS4 vehicles, can be sold within 10 days after the lockdown ends. The ruling also stated that no BS4 vehicle can be sold in Delhi NCR and the vehicles have to be registered within 10 days of sale. The 21-day lockdown period will end on April 14, which means dealers can sell their BS4 stock till April 24, 2020.
The Federation of Automobile Dealers Association (FADA) and the Society of Automobile Manufacturers (SIAM) had moved the top court for extending March 31 deadline for sale of BS4 vehicles. FADA argued that 15,000 passenger cars, 12,000 commercial vehicles, 7 lakh 2-wheelers are at stake due to, first the slowdown in the industry and the later the drop in footfall at showrooms due to the coronavirus pandemic.
However, the apex court said that there is no point in extending the deadline for sale of BS4 vehicles and burdening the environment anymore. The court said, " Let's learn to sacrifice, do something for country's environment, have sympathy... We understand the psychology of businesses and dealers... You want to take advantage of Corona(virus) for a few days of lockdown in March."
Saket Mehra, Partner, Grant Thornton Advisory said, "This move was expected but in reality may not meet the desired objective of clearing the BS IV inventory because post the lockdown, consumer sentiments will continue to be low, people will observe caution in moving out of their homes and the will be over cautious in spending money particularly on capital assets. This may not result in liquidation of inventory within the next 10 days of end of the lockdown. Perhaps, a 6 month extension could have helped in these uncertain times."
It has been estimated that the Indian automobile industry is likely to suffer an estimated revenue loss of around ₹ 13,000 crore to ₹ 15,000 crore due to the coronavirus outbreak. Currently, the two-wheeler industry alone left with BS4 inventory worth ₹ 4,600 crore, while dealers we left with an inventory of approximately 8,35,000 units. Furthermore, with the production being halted, the Society of Indian Automobile Manufacturers (SIAM) has already estimated a minimum loss of ₹ 2300 crore each day.
Speaking to carandbike about the Supreme Court's order on the extension for sale of BS4 vehicles, Harshil Choksey, MD, Autobahn Group said, "We are not too happy with the announcement. Ideally, the deadline extension should've been till June 2020, given that the buying sentiment will be low once the lockdown had been lifted. We were looking forward to liquidating stocks at the end of March with Gudi Padwa and the March-end period ideally an auspicious time for the auto industry. However, the lockdown has postponed plans of the same. It will be a burden on the dealers and the banking sector once the lockdown has been lifted to sell the pending 10 per cent of the BS4 stock within 10 days."