Coronavirus Pandemic: Two-Wheeler Companies Struggling To Clear BS4 Inventory Worth &#8377 4,600 Crore

Coronavirus Pandemic: Two-Wheeler Companies Struggling To Clear BS4 Inventory Worth &#8377 4,600 Crore

03/24/2020

As the entire country is currently facing a lockdown, the domestic two-wheeler market has been facing several restrictions because of the novel Coronavirus Pandemic. Currently, various two-wheeler companies are under pressure to clear out the remaining BS4 inventory ahead of the BS6 transition, which will come into effect from April 1, 2020. The bike manufacturers are left with BS4 inventory worth Rs 4,600 crore with minimal hope of liquidating the same. Moreover, the two-wheeler makers and dealerships are also providing massive discounts to clear out the huge inventory of approximately 8,35,000 units.

Two-wheeler manufacturers have been facing several difficulties in clearing out the BS4 stocks

With the majority of dealerships across several districts and cities under lockdown, the customers are refraining to make any visits to the outlets, hence footfalls at dealerships are zero. Moreover, many cities are even under curfew, as the government has instructed all the citizens to curtail non-essential movement. The government has also called for social distancing urging the citizens to remain at home during this phase. Apart from dealer association – FADA, companies such as Hero Moto and HSMI are knocking at the doors of the Supreme Court seeking relief in liquidating the BS4 stock beyond the specified deadline of March 31, 2020.

The two-wheeler dealerships have been impacted by the economic slowdown as well as tight liquidity circumstances during this fiscal and the matters are likely to become further worse.

carandbike approached The Federation of Automobile Dealers Associations (FADA) to ask about the BS4 two-wheeler inventory. A spokesperson said, “The Two-Wheelers inventory at dealerships across India is approximately 8,35,000 units valued at around 4,600 Cr.

Shamsher Dewan, Analyst with investment information and credit rating agency ICRA said, “In all likelihood, there will be no relaxation from the government as far as the deadline for BS6 implementation is concerned. There are a few options, for example, the government may give a reprieve under a new ordinance, the OEMs may recall the BS4 vehicles and sell them in export markets, like Nepal and Africa, but there will be cost implications. Then, OEMs can maintain existing BS4 stock for spares, but will have cost implications, and the last option will be to recall the stock and upgrade to BS6, but that is a technologically grey area. The best option, we feel, will be to sell the BS4 stock in export markets, but the cost to recall and export the BS4 stock will have to be borne by the manufacturers.”

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