The Story of Ailing Indian Auto Industry; Fear of BS-IV Stock Turning to Scrap and Coronavirus

Remember the time when the Indian automotive trade was registering a large decline in gross sales month after month, for nearly a yr? This was the time till Diwali final yr and in the event you have a look at the numbers, it didn’t actually get higher sufficient for the trade to make up for the continual decline in gross sales that they’ve been registering quarter after quarter. In reality, it was removed from it.

At that cut-off date, it was presupposed to be the Diwali pageant season that will kick the gross sales chart in direction of a moderately unfamiliar upwards route, sadly, that wasn’t actually the case. Post that, it was presupposed to be the flip of the calendar, the New Year which might make issues higher. It was mentioned that folks simply needed to get their fingers on 2020 automobiles and likewise, that many who had not but bought their car have been ready for reductions on the 2019 inventory. The reductions got here, however the consumers didn’t. Passenger car gross sales noticed a year-on-year (YoY) decline of 6 per cent in January 2020. In February, it was down as soon as once more, by 7.61 per cent for home passenger car gross sales, as per the information by the Society of Indian Automobile Manufacturers (SIAM).

In December, the gross sales have been down by 1.24 per cent and in November, the gross sales have been down by 3.43 per cent This means, that for the final 4 months, there was a year-on-year decline. The solely inexperienced that the trade noticed was within the month earlier than that, in October, when the gross sales have been up by a mere 0.28 per cent – an increase of 804 extra items offered by your entire home passenger car trade.

Before that, the gross sales had plunged 24 per cent in September – this was the 11th consecutive month of declining gross sales.

So all in all, it has been a woeful 16 months for the Indian automotive trade. The solely factor scarier than that is the numbers which might be anticipated for the month of March 2020 – the month the place Coronavirus has pushed individuals to apply social distancing and isolate themselves from the world, for the correct causes in fact.

But that additionally implies that nearly nobody will likely be pondering of visiting car dealerships proper now not to mention buying them. And all of this isn’t solely restricted to the variety of automobiles being offered, this, immediately and not directly, impacts dealership employees, house owners, suppliers, accent retailers, and plenty of extra.

Don’t get us unsuitable, we’re not saying that one must be shopping for automobiles proper now as social distancing is of the best precedence, nevertheless it has come at a time which couldn’t be worse for the automotive trade.

Manufacturing vegetation throughout India, throughout producers, are suspending operations. This means, even those that are working in these vegetation have no idea when the normalcy continues. And since there will likely be no new automobiles coming from the manufacturing vegetation, sellers must make do with the present inventory. And that’s the place one other side of your entire difficulty comes up.

As per a Supreme Court order, automobiles that aren’t compliant to BS-VI emission norms won’t be allowed to promote from April 1, 2020. Now let’s method this little by little to grasp the severity of the state of affairs.

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First, investments. In order to satisfy a brand new, stricter emission norm there may be a whole lot of money and time that goes into it. Companies not solely have to determine how you can update their present lineup but additionally change their future plans fully as they need to think about the price of improvement of the brand new know-how, when will it’s examined sufficient for it to be offered out to the general public after which plan their upcoming merchandise as per the brand new timeline. This additionally means reshuffling the timelines for letting the suppliers know what to develop, how a lot to develop and when to develop. Post which, there will likely be adjustments to the manufacturing plant to introduce the extra steps required to satisfy the brand new emission norm, and deal with the workforce accordingly. So for sure, it takes time and a whole lot of thought.

Next, the timeline. The authorities had final up to date the emission (from BS-III to BS-IV) solely three years in the past, in 2017. The automakers had barley completed the transition course of when in October 2018, the Supreme Court dominated that from April 1, 2020, automakers will now have to satisfy BS-VI emission norm, skipping the BS-V stage fully. With this, the Indian emission norms will likely be at par with the strictest emission norm adopted worldwide which is Euro-VI. The BS-VI normal is ever so barely relaxed as in comparison with Euro-VI, however

Fast ahead to final month and the trade has to maintain attempting their stage greatest to satisfy the deadline. This additionally resulted in a number of automakers merely opting out of the 2020 Auto Expo citing that the funding in direction of assembly the brand new emission norm has been so excessive, that an occasion like Auto Expo – India’s largest automotive occasion that takes place as soon as each two years – needed to take a again seat.

Come March 2020, and there are nonetheless a whole lot of dealerships throughout India – for each two-wheelers and four-wheelers – nonetheless have an enormous inventory of unsold BS-IV automobiles. Almost everybody had their bets positioned on the final couple of weeks of March the place firms and dealerships have been anticipated to come back out with profitable presents to liquidate their present inventory however as everyone knows, that has not occurred.

Instead, there may be now a worldwide pandemic nearly guaranteeing the truth that the sellers with the BS-IV inventory will be unable to promote out their stock within the remaining one week’s time. You additionally need to have in mind the truth that the car really must be registered earlier than April 1, 2020, to ensure that it to get the necessary papers that make it highway authorized.

As a end result, the Federation of Automobile Dealers Associations (FADA), on behalf of its 25,000 members, has approached the Supreme Court searching for an extension to the deadline until May 31, 2020. This is the second time that they’ve approached the apex court docket as they’d requested the identical earlier as nicely however the court docket had refused on February 14, 2020.

On high of all of it, the worldwide financial system has been taking successful too making it even tougher for a lot of the automakers current in our nation as they don’t seem to be solely dealing with troubles in India however from the world over.

At the top of the day, the endless hit that the trade is taking for the reason that previous so many months appears to be solely getting worse. Currently, the Supreme Court is anticipated to listen to the matter on March 27, 2020, which will likely be 4 days earlier than the deadline of promoting BS-IV automobiles. If the deadline is just not prolonged, there will likely be losses for lots of people and a whole lot of completely new automobiles, scooters and bikes being despatched off to the scrapyard.

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This post was last modified on March 24, 2020 11:24 am

Joy: Hi Folks. I am Jyoti, pursuing my passion to write content on Technology and Automobiles. I am a B.Tech (IT) graduate who loves to write content on different niche. Being passionate since college days, I took it as my full-time career. I started this blog to deliver unbiased reviews to the readers and let them choose the right product based on their reviews. If you want to contact me, you can drop your mail at

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