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Auto retail sales decline 7% in January; no pre-buying to beat BS-VI price hike

Onset of new emission norms is expected to make petrol vehicles more expensive by Rs 20,000 for cars and Rs 6,000 for two-wheelers and Rs 100,000 for diesel vehicles

twitter-logoSumant Banerji | February 20, 2020 | Updated 16:37 IST
Auto retail sales decline 7% in January; no pre-buying to beat BS-VI price hike
Instead, FADA says customers may be postponing their decisions to buy vehicles

There's no evidence of customers advancing their decision to buy cars or two-wheelers due to the impending transition to BS-VI emission norms as retail sale of automobiles in January registered over 7 per cent decline in India.

The onset of new emission norms is expected to make petrol vehicles expensive by Rs 20,000 for cars; Rs 6,000 for two-wheelers; and Rs 100,000 for diesel vehicles. Some manufacturers anticipated advance purchases by consumers to beat the price hike. Instead, the Federation of Automobile Dealers Association (FADA) said customers might be postponing their decisions.

"Auto sales continue to be in the negative territory in the month of January, except for 3W, with many consumers still not concluding on their decisions. The ongoing transition of BS-IV to BS-VI is also a factor in delayed purchase decision," said Ashish Harsharaj Kale, President, FADA. "Overall weak economic sentiment continues and even the Budget 2020 did not have any direct measures to spur growth in the immediate term for the sector," Kale added.

Sale of passenger vehicles in the month declined 4.6 per cent at 290,879 units, while two-wheeler sale fell 8.8 per cent at 12,67,366 units. The overall decline was, however, much less compared to December when sales declined 15 per cent.

Also read: Slowdown Blues: Passenger vehicle sales decline 6.2% in January, steepest in four months

Dealers had approached the Supreme Court for an extension of the deadline for the registration of BS-IV vehicles beyond March 31, but with the apex court dismissing their petition they have told manufacturers not to dispatch BS-IV vehicles anymore.

"With weak demand, the liquidation of complete BS-IV inventory is our top focus. We have already appealed to all OEM's to switch over completely to BS6," Kale said. "The last 14 months has seen the one of its toughest times for auto sales. We have also told manufacturers through SIAM that any BS-IV Vehicle Billed further, which are not against specific customer orders, should be on a returnable basis to avoid financial loss to dealers."

Also read: Auto sales show no signs of recovery; two-wheelers decline 16.6%, cars down 8.4% in December

The inventory level for passenger vehicles stood at 15-20 days in January against 20-25 days in December. For two-wheelers and commercial vehicles, it was 25-30 days against 30-35 days in December. FADA said a majority of its dealers -- 72 per cent -- expected sales to either decline or remain "flat" this month, while about 22 per cent dealers rated the inventory situation "bad".

In April 2017, the industry had witnessed a messy changeover in emission norms from BS III to IV. The SC's last-minute verdict saying no BS III vehicle could be registered or manufactured beyond April 1, 2017, led to distress sale and a mad rush to liquidate stocks. It had also led to significant losses to a number of dealers.

Also read: SC refuses to extend March 31 deadline for BS-IV vehicle sales

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