Indian automakers to abide by Supreme Court order

Reacting to the Supreme Court order banning the sale of BS III stocks of vehicles, Vinod K Dasari, president of the Society of Indian Automobile Manufacturers (SIAM), said that industry would abide with the order.

He said the auto industry has been ready with BS IV manufacturing since 2010. However, the sale of BS IV vehicles was not possible, nationwide, due to lack of BS IV fuel. Running a BS IV vehicle with BS II fuel can cause severe problems to some vehicles. The auto industry is in full compliance with the emission norms set by the government that stipulates the date of ‘manufacturing’. The historical implementation of emission norms also reinforces the current law that stipulates ‘manufacturing’. 

However, Dasari added that while no one pushed for BS IV fuel availability for seven years to change over faster, this sudden decision – just a few days before the changeover on April 1, 2017 – is rather unfortunate as it causes undue stress on the entire industry, and causes loss of jobs. The auto industry, anywhere in the world, requires a stable and predictable policy which allows for long term planning and investments.

As a proactive measure to reduce pollution, the auto industry has for a long time been urging the banning of older vehicles, which would have a substantial impact on the air quality. Also, automakers in India are working with the government to meet BS VI emission norms by April 2020, which will be the fastest adoption of BS VI in the world (in 3 years), leapfrogging BS V. 

Real impact yet to be known  
However, the real impact of the decision on companies, their dealers and BS III stock is yet to sink in. Tata Motors issued a statement saying that the “decision by the Hon’ble Supreme Court to ban sale of all BSIII vehicles from April 1, 2017 is an unexpected and unprecedented move that will have a material impact on the entire automotive industry, OEMs and dealer network.

The industry had planned the current transition into BS IV in line with the accepted past practice of stopping production of earlier emission standard vehicles effective from the transition date. In the context of this previous experience, this decision by the apex court is a ‘penalty’ to the entire automotive industry.”

Meanwhile, Ashok Leyland clarified its position saying, “Contrary to the various reports in the media about Ashok Leyland having to take a huge write-off of BS III inventories, the company clarifies that the impact will be minimal.

Ashok Leyland has been making BS IV vehicles since 2010 and has sufficient capability and capacity to make BS IV vehicles.  However, since BS IV commercial vehicles cannot run properly on BS III fuel – and such fuel is not available nationwide – our customers continued to buy BS III vehicles.

Given the current demand, majority of the vehicles in the pipeline have already been sold. Some more will be sold in the next couple of days where we have customer orders. Of the little inventory that we expect to remain beyond this, we will export them to other markets where we have significant presence and still operate on BS III norms. Finally, for any other vehicles still leftover, the company confirms that it will be able to easily upgrade them to BS IV at minimal cost.”

Also read: Supreme Court bans sale of BS III vehicles in India from April 1