New Emission Regulations crippled CV Sales in April
Published On May 26, 2017
The Supreme Court ban on the sales and registration of BS-III vehicles has been taking a toll on the automotive industry ever since it came into effect. After a riptide buying spree in March and overstocking of the BS-III vehicles ahead of the ban, commercial vehicles sales plunged to the lowest in seven and a half years in April.
Talking in numbers, CV sales in April witnessed 23 percent drop registering 41,490 units, lowest since November 2009 when the sales hit a low mark to 40,855 units. The medium and heavy duty segment witnessed the maximum fall of 59 percent recording just 8,194 units while that of buses segment witnessed nearly 55 percent drop. However, a tiny counterbalance to the overall impact was put by light commercial vehicles and pick-up trucks.
The after effects of the BS-III ban resulted in the desperate need of BS-IV stock for selling in April. Ravindra Pisharody, Executive Director, Commercial Vehicles at Tata Motors, said “This is an unusual decline, in exceptional circumstances. The higher demand at a short notice was not met in production as vendors struggled to meet higher demand, especially in the M&HCV (medium and heavy commercial vehicle) segment”.
Further, the price increase of the BS-IV vehicles resulting in low demand caused double whammy to the whole situation. Leading CV maker Tata Motors’ sales fall to 36 percent to 16,017 units as compared to 21,783 units a year earlier in the same month.
Vinod Aggarwal, MD, Volvo Eicher Commercial Vehicles reiterated the same stating that company focused on streamlining the April sales which was done in the last two days before the ban. Apart from this, the sudden decision banning sales and registration of BS-III vehicles did not provided enough time to the suppliers to stock the BS-IV vehicles to the required level.
Mahindra & Mahindra however, said that small trucks demand was not affected but uncertainty prevailed in the heavy duty segment. He also said that the ambiance of demand would still remain challenging in coming 2-3 months.
Likewise, the component vendor network was also hit hard. According to some reports, Tata Motors due to shortage of fuel pumps has not even met half of its total production commitment for April. Others manufacturers also faced similar problems.
However, some manufacturers seriously think of sales coming back on track due to implementation of GST and normal monsoon. Tata Motors expects 10-15 percent growth in the second quarter of FY18 as people would need time to get accustomed to all these things. The growth would be driven by LCVs and buses.
Many of the manufacturers had forsaken their BS-III stock at dealerships, artificially boosting the March 2017 sales number, as they were expecting to get more time to dispose of the already manufactured vehicles. However, this plea was rejected by the Apex Court and now companies are contemplating on other alternatives. It is to be noted that sales reported by the industry are of factory dispatches, not retail sales.