The Supreme Court has allowed for the sale and registration of BS4 vehicles for 10 more days after the lockdown is lifted. However, auto retailers can only sell 10% of their unsold BS4 inventory.
With the ongoing coronavirus crisis and lockdown in the country, there were huge doubts about the sale and registration of BS4 vehicles in the country. FADA had appealed to the apex court for an extension of the BS6 deadline and now, the Supreme Court has finally passed a judgement. The Supreme Court has allowed for a conditional extension of the BS6 deadline. What this essentially means is that automotive retailers will be able to sell only 10% of their unsold BS4 inventory for only 10 days after the lockdown has been lifted.
Also, BS4 vehicles that have been bought but have not been registered will be eligible for registration after the lockdown has been lifted as well. This relaxation of the original deadline comes in the light of the nationwide lockdown for which more than 20,000 dealerships across the country have had to shut doors. Naturally, a lot of BS4 inventory were left unsold. Interestingly, Delhi NCR has been left out of the purview of the order, meaning no sales of BS4 vehicles can take place in the region post March 31.
Dealers across the country were confident that they will be able to liquidate their BS4 stocks before the March 31st deadline. They were also banking on the festivities of Gudipawa and Ugadi in Northern India which brings in more customers than usual. However, with the rising cases of the coronavirus in the country, the dealers started to see less footfall in the showrooms even before the lockdown was imposed. Dealers were offering heavy discounts on remaining stock but the 21-day lockdown now means that no sales operation could take place before April 15.
What also remains unclear at the moment is the Supreme Court’s definition of ’10 percent unsold BS4 stock’. Although there has been some respite, the decision is not entirely favorable after all. It will cause huge losses to dealers across India as there are still lakhs of BS4 vehicles lying unsold. With the 10% rule in place and just 10 days in hand, we doubt how many vehicles will actually be sold. Moreover, buying sentiments wouldn’y sky rocket either, particularly after such a crisis.
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Most manufacturers had begun transitioning to BS6 vehicles by the end of 2019 or start of 2020. However, there are still over seven lakh BS4 vehicles (approximately 700,000 two-wheelers, 12,000 passenger vehicles and 7,000 commercial vehicles) all across India, cumulatively worth over Rs 6,300 crore, which are yet to be sold. The dealers have also approached the manufacturers to reimburse dealers for the losses they are set to suffer.
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Among other solutions, some dealerships have come up with a unique solution of registering remaining BS4 vehicles in their own name or their staff’s name and then sell them later as a pre-owned car. Although the buyer would be buying it as a second-hand car, it will have 0 kms on the odometer. Some dealers also suggested the manufacturers take back the remaining vehicles to disassemble them and use them as spares. We are awaiting responses from manufacturers and dealer bodies. Stay tuned for updates.
