Honda Motorcycle and Scooter India (HMSI) is hoping that the Supreme Court will consider the prayer of two-wheeler manufacturers to extend the deadline for liquidating existing stock of BS4 (Bharat Stage IV) two-wheelers. Dealers of many two-wheeler manufacturers have not been able to liquidate BS4 stock within the stipulated deadline of March 31, 2020. With the ongoing lockdown across the country due to the coronavirus pandemic, dealers have not been left with thousands of BS4 two-wheelers across different manufacturers. Honda is now hoping for the best and has adopted a wait and watch policy to hear from the Supreme Court.
Speaking to Carandbike.com, Yadvinder Singh Guleria, Senior Vice President - Sales & Marketing, Honda Motorcycle and Scooter India, said that even though HMSI had a well-structured transition plan to BS6, the challenges posed by the coronavirus pandemic has thrown a spanner in the works. The result is that many Honda dealers are now stuck with inventory of BS4 stock, which under the current lockdown can't be liquidated. The current festive season, which has traditionally meant big volumes sales, also has come under the lockdown, and many customers who had made bookings earlier, have cancelled bookings, he said.
"Nobody has an answer what is going to happen. The scale of the current lockdown is unprecedented. We have been going well as per our plan, actions were also shared with network partners since July 2019. Today, 6.5 lakh BS6 Honda two-wheelers are in the market, even before the lockdown was announced. We also have maximum BS6 models in the market.
"Till the first week of March, everything was on plan, and with the festive season coming in, particularly Gudipawa, and Ugadi, dealers could have liquidated existing BS4 inventory. Many RTOs also announced their own deadlines not in line with SC guidelines. Different lockdowns and restrictions announced by different states also was a challenge. Walk-ins from customers came down drastically, we're facing the reality, There couldn't have been a Plan B, because this was unexpected," Guleria said.
The Federation of Automobile Dealers Association (FADA) has once again approached the Supreme Court for an extension in clearing out BS4 inventory. In early March, before the lockdown was imposed, certain state governments issued circulars directing that application of registration for BS4 vehicles will not be considered, even before the March 31 deadline. Industry body Society for Indian Automobile Manufacturers (SIAM) had filed an application in the Supreme Court that registration of BS4 vehicles be allowed, at least till March 31, 2020. But now, with the countrywide lockdown in place, dealers could not even take advantage of the current festive season.
"In the Western region, sales peak approximately 7 times on Gudipawa, on the first day of Navratra. We were confident of liquidating the BS4 stock. We approached the Honourable Supreme Court last week, filed an application to give a relaxation due to the Covid lockdown. But Supreme Court hearings are not happening, because of the lockdown, so we have to wait and watch as to what is going to happen. FADA and SIAM are also appealing to the SC, but we don't have any solution right now in sight. We can only wait and watch for the time being. Despite our best efforts, some of our dealers will be left with BS4 stock. Every state has a different rule, so registrations are not possible even right now. We can't assess the situation which is not in our control, so we have to accept that nothing is going to move till at least April 14," Guleria said further.
HMSI was one of the few two-wheeler manfuacturers to roll out the first BS6 two-wheelers, and replace existing BS4 production lines of large volumes models like the Honda Activa scooters, and the Honda Shine motorcycle with BS6 models several months before the deadline.
"We have had a plan for pushing our BS6 models as it is. We have three TVCs of BS6 vehicles running and we were confident of liquidating BS4 stock and moving to BS6, everything was aligned and well managed. The moment we reached first week of March we started going off-track due to local restrictions, and RTO issues. There were many customers who came to take their money back. We had the best of plans, unfortunately those didn't work out as planned," added Guleria.
Analysts estimate that current BS4 inventory levels of two-wheelers will be between 6,00,000 to 8,00,000, and that will translate to cost implications of at least ₹ 3,600 crore. To liquidate this standing stock, at least 15 days of sales are required. But with the current lockdown in place, the industry will face tough times, and left with few options. The best option for manufacturers, analysts say, will be to divert the existing BS4 stock to export markets, where emission regulations are still not as strict as the upcoming BS6 norms, which will come into effect from April 1, 2020.