Sunday, 18 November, 2018

Commercial vehicles can cost 6-10 per cent more from April 1

Sherri Watson | 31 March, 2017, 01:08

This decision comes after the Federation of Automobile Dealers Association (FADA) had appealed to the Supreme Court to allow sales of BS-III vehicles, even after the set deadline.

However, the automobile industry did not take any action in the matter and continued manufacturing BS III vehicles.

The BS-IV cars cost more than their BS-III versions; however, the incremental cost is not too high. At this point of time, the only practical recourse seems to be to retrofit these vehicles to comply with BS IV regulations or to sustain losses.

The Solicitor General argued that out of the around 8.24 lakh vehicles, there were 96,724 commercial vehicles which run on diesel. One can also buy and sell legal existing BS-III vehicles in the country.

It further said that the manufacturers of such vehicles "were fully aware that eventually from 1st April, 2017 they would be required to manufacture only BS-IV compliant vehicles but for reasons that are not clear, they chose to sit back and declined to take sufficient pro-active steps".

A bench headed by Justice M B Lokur directed that BS III vehicles shall not be registered from April 1 and rejected the plea of manufacturers to allow them to sell 8.2 lakh vehicles that are held in stock.

However, India's automobile bigwigs had a mixed reaction on the Supreme Court order.

Vikram Kirloskar, Chairman and MD of Kirloskar Group part of JV Toyota Kirloskar said that they have all BS IV vehicles and do not have any BS III vehicles.

Federation of Automobile Dealers Association (FADA) report indicates that a whopping 20,000 dealers across the country will be affected by this ban because they tend to keep stock of vehicles with them and sell them when the demand for them rises. With the ban of the sale and registration of BS-III vehicle, India will implement the sale of BS-IV vehicles, already in-place at several cities which also includes the likes of Delhi. Although the notification says "production, not sales from April 1", but "you have to read what is unwritten", he said. Auto market leader Maruti Suzuki is least affected by the order and has been making BS IV vehicles since 2010.

"As far as cars and scooters are concerned, it can not be converted from BS-III to BS-IV.It is not possible". This is due to their sizeable inventory, costs associated with recalls (from dealers) and upgradation to BS-IV norms, according to Subrata Ray, group vice-president, corporate sector ratings at Icra. "However, since BS IV commercial vehicles can not run properly on BS III fuel and such fuel is not available nationwide, our customers continued to buy BS III vehicles", said Vinod K. Dasari.