The Supreme Court has made it categorical that only BS VI-compliant vehicles will be sold in India from April 1, 2020.
This means that the current fleet of BS IV cars, two-wheelers and trucks will be retailed for the next 17 months only. In reality, factory inventories will begin depleting from December 2019 as the dealership pipeline gets ready to be replenished with BS VI vehicles.
Manufacturers were hoping that there would be a grace period to liquidate old stocks beyond April 2020 but the SC’s directive has completely eliminated that possibility. It will now be a huge challenge for them to plan the phaseout schedule of BS IV vehicles while ushering in the new range.
“It is going to be really tough,” admits an auto industry executive. According to him, market sentiment is already down thanks to rising fuel prices and, in the case of two-wheelers, the added burden of insurance costs. With the country heading for elections next year, the uncertainty could grow even further.
In this backdrop, he wonders, it remains to be seen if customers will be prepared to cough up money for a BS IV car whose resale value is bound to plummet in the BS VI era. Manufacturers will typically offer generous discounts to entice buyers at a time when material prices are also going through the roof.
The silver lining is that there is no ambiguity about the road ahead. Welcoming the SC order, N Raja, Deputy MD, Toyota Kirloskar Motor, said: “Such clear and amplified directives help develop viable technologies with collaborative efforts to achieve the nation’s mission plans and also provide sufficient lead time for the auto industry to recalibrate manufacturing towards achieving smoother transition.”
The common crib among manufacturers is that there is no consistency in policy. This came to the fore last year during the transition from BS III to IV, when they found themselves saddled with huge stocks and had to extinguish them in a matter of days.
It is a different challenge today with automakers working round the clock to meet the BS VI deadline. This is no walk in the park, especially when this means making a huge leap directly from BS IV.