Indian auto industry goes all out to dilute BS III stocks

It's not December, but it's raining offers in the automobile market like those usually doled out to dilute stocks before new year stocks arrive. 

The offers are mainly for two-wheelers and commercial vehicles, triggered by the Supreme Court judgement banning sale and registration also of BS III vehicles beyond March 31, 2017. For instance, a Honda CBR 250 customer can expect discounts of up to Rs 50,000 at some dealerships. That is quite an attractive discount for a bike with an ex-showroom price of Rs 171,000 to Rs 204,000. Honda has announced a cashback offer of Rs 22,000 across all its model range (BS III only). For the TVS Motor range, the offer goes up to Rs 20,150.

Market leader Hero MotoCorp is offering cashback offer of Rs 12,500 for its scooters, Rs 7,500 for all motorcycles except the HF Series and the Splendor which offer Rs 5,000 cashback to their customers. In addition, customers get free insurance for these models. The cost to dealers for the cashback will be reimbursed by the company. Dealers across brands are going the whole hog in clearing as much stocks as possible. In the process, it is likely that some at least would overtake their record in terms of daily sales. "You will get a vehicle in just half an hour if all documents are in place," says a dealer.  

CV sector also sees discounting
The commercial vehicle market, where discounting has been a regular phenomenon for the last few years, is also witnessing some extra discounts of a couple of percentage points more. However, unlike two-wheelers, the stock of BS III trucks and buses will not get sold as quickly since the buying triggers of the CV market are purely dependent on demand for movement of goods. The arrangement of finance for these big-ticket buys could also take longer than obtaining finance for two-wheelers.     

Discounting is only one of the avenues of clearing BS III stocks. Exporting to markets with BS III-like emission norms and recalling unsold stock and upgrading them to be BS IV compliant are the other two options. "We are exploring all three options. There's no fourth option available," says a senior executive of a commercial vehicle OEM.

As per reports, as of March 20, 2017, there was an unsold stock of 824,275 vehicles across the two-wheeler, three-wheeler, passenger vehicle and commercial vehicle segments.

What happens to the unsold stock of BS III vehicles at dealerships? It is quite likely that OEMs will take them back. "We'll either bring our BS III vehicles back and upgrade them to meet BSIV norms, or export them," says an official of a commercial vehicle manufacturer. A leading dealer says, "unless the unsold stock is made saleable by the OEMs, it will be difficult for dealers to pick new stocks".

Right now the focus of the OEMs and dealers with BS III stocks is to put full concentrated efforts to sell as many vehicles as possible by March 31.