Banning sales of vehicles with BS-III emission norms will have a negative impact of Rs 12,000 crore on the automobile industry, as about 8.2 lakh new vehicles will be reduced to scrap in value after Supreme Court’s judgment on Wednesday.
Car and bike makers ramped up production January onwards as the uncertainties caused by demonetisation started settling down, and sales of vehicles dropped by more than 50% in November, December.
“The chunk of the inventory of BS-III vehicles pertains to the two-wheelers segment and these may have to be diverted to the international markets where BS-III vehicles are still permitted,” said Shrikant Akolkar, research analyst, Angel Broking.
There are about 7.5 lakh BS-III two-wheelers currently. 1.2-1.3 million two-wheelers are sold every month in India, and another 1.7 to 1.8 lakh units are exported. Companies, however, said they will not provide significant discounts of BS-III vehicles in the next few days.
As far as commercial vehicles are concerned, there is an inventory of 75,000 vehicles. Vinod K Dasari, managing director and CEO of Ashok Leyland said “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,” said Dasari.