Supreme Court stands firm by March 31 BS IV deadline, FADA unlikely to pursue issue

by Nilesh Wadhwa 14 Feb 2020

The Supreme Court of India today refused to give an extension to sales and registration of BS IV vehicles in the country, for which the last date is March 31, 220. The new and stringent BS VI emission norms are mandated to be implemented from April 1, 2020.

The dealer fraternity and the government had earlier asked the Supreme Court for an extension for unsold BS IV vehicles after April 1, 2020, as the domestic industry is facing a significant slowdown in both wholesale and retail. At present the overall sales for the auto industry in January 2020 was 1,739,975 units (-13.83%), with passenger vehicles at 262,714 units (-6.2%), commercial vehicles at 75,289 units (-14.4%), three-wheelers at 60,903 (12.69%) units and two-wheelers at 1,341,005 units (-16.06%).

In view of the prolonged sales slowdown and rising inventory concerns, Federation of Automobile Dealers Associations (FADA) , which represents over 25,000 dealers across the country, had in December 2019 approached the Supreme Court to allow some relief for the transition to the BS VI emission norms. The current situation at the dealer level seems to be a bit of a challenging task, with two-wheeler and commercial vehicle inventory to be a "case of concern".  In contrast, passenger vehicle inventory is at a comfortable level and for some OEMs and models there seems to be zero BS IV inventory at the dealer level.

Given today's judgement by the Supreme Court, the situation would need some positive momentum for the consumer sentiment, an aggressive marketing push by the dealer fraternity or heavy discounting to help elevate the BS IV stocks or the dealerships will see massive hit on their revenue.

While at present the situation may not see a knee-jerk reaction, but with each passing day, and by March 15, the inventory level reduction would remain the key target for both OEMs and dealers. 

Update: FADA urges OEMs for full shift to BS VI despatches to dealers
On February 15, FADA appealed to all vehicle manufacturers in the country to undertake a complete shift to BS VI vehicle despatches to dealers with immediate effect

Commenting on the Supreme Court order, FADA president Ashish Kale said: "Hearing FADA’s plea, the Hon’ble Supreme Court did not consider our appeal for extension of sale deadline for stock vehicles and reconfirmed on their October 18 order of March 31, 2020 as the deadline for sale and registration of BS IV vehicles. Considering the long downturn which has lasted well over a year now and the current dynamic demand situation, selling 100 percent of the BS IV vehicles currently in stock with our members by 31st of March is a tough task. FADA hence appeals to all OEMs to shift completely to BS-VI vehicles for all wholesale despatches to dealers and stop further billing of BS-IV vehicles with immediate effect to dealers, thereby helping liquidation of current BS-IV Inventory for a smoother transition to BS-VI.”

In an internal message circulated to dealers, the FADA president also advised dealers to plan liquidation of BS IV inventory as per the March 31 deadline for sale and registration of BS-IV vehicles.