Companies

BS-III order kicks 2-wheeler sales into high gear

Our Bureaus March 31 | Updated on January 15, 2018 Published on March 31, 2017

Customers inspect two-wheelers at a dealership centre in Hyderabad, on Friday. - KVS Giri

A crowded two-wheeler dealership in Chennai scrambles to sell stocksbefore the deadline, on Friday. - BIJOY GHOSH

Thanks to a Supreme Court verdict banning sale of vehicles conforming to BS-III emission norms from April 1, manufacturers and dealers offered huge discounts to get rid of stocks on Thursday and Friday

Two-wheeler buyers never had it so good. Thanks to a Supreme Court verdict banning sale of vehicles conforming to BS-III emission norms from April 1, manufacturers and dealers offered huge discounts to get rid of stocks on Thursday and Friday.

In a way, it was a surprise gift to people from the apex court, said a young engineering student in Chennai, who was rushing into a two-wheeler dealership in Chennai to buy a bike by taking advantage of the discounts ranging from ₹8,000-20,000, or 15-30 per cent.

However, from the dealers’ perspective, it was a different story. “Remember, it is not just the steep discounts but our April sales are as good as washed out,” pointed out a Bajaj dealer, reacting to the buyers’ scramble for motorcycles over the past two days.

Auto manufacturers resorted to offering discounts to employees and customers, and exports to countries where BS-III vehicles are still being used. The other option was to recall the vehicles and make them BS- IV compliant.

In Mumbai, dealers were offering discounts between ₹ 25,000 and ₹1 lakh depending on the vehicle. Premium motorbikes, priced over ₹4 lakh, were being sold at 25 per cent discounts at some dealers in South Mumbai.

“From tomorrow, these motorcycles will be just scrap. We have no option but to somehow sell,” said a TVS motorcycle dealer in Chennai. The situation is tougher for dealers in smaller towns and cities. They hold much bigger stocks, he said.

Overloaded registration

Adding to the grouse, dealers are finding it tough with online registration of vehicles. Systems are overloaded and slowing down. “We have to show proof of sale — that means filled-in invoice, receipts and the Form 20 of the RTO office filed. Sales-tax returns also have to be shown,” said a Bajaj dealer.

At just one RTO in Central Chennai, an official said they normally register 60-80 vehicles daily and most of them are motorcycles. On Thursday, the number tripled to over 180 vehicles; the increase was entirely due to motorcycle registrations. It could be the same on Friday, he said.

“Customers are getting greedy. They know we have to sell these stocks today and are demanding bigger discounts,” complained a motorcycle dealer, as he fielded a barrage of questions from buyers on models available and how much the prices have been slashed.

The two-wheeler segment had the highest inventory at about 6.7 lakh units among all vehicle categories. Thus, immediately after the SC ruling, the companies decided to sell as many units as possible, while the manufacturers can either try exporting the remaining vehicles or be forced to scrap them.

Sold out

Most of the dealers in Chennai were reported to have exhausted their stocks by Friday afternoon and in a few places, the dealers had downed shutters. “We have exhausted most of the stocks. We will take a call on whatever portion is left unsold. This could be routed to export markets,” said a senior official of Bajaj Auto.

Bajaj Auto and TVS Motor reportedly had a smaller inventory of vehicles conforming to BS-III emission standards.

TVS Motor confirmed that their dealers had sold off most of the stocks. “Top-selling models were completed sold out,” said a senior official of a TVS Motor dealer.

Even online portals did brisk business and some of them saw huge spike in traffic.

“We have never seen such traffic spike in recent years,” said Karthick Annamalai, co-founder of one of the portals www.vicky.in. “We are trying to make our portal more responsive despite this huge influx of web traffic, and help customers buy BS-III vehicle with best discount.”

KV Babul Reddy, CMD of Vinayaka Bajaj, Hyderabad, told BusinessLine: “The available stock of vehicles of most dealerships has been sold out. Customers are happy as they got huge discounts; manufacturers are happy as their stocks have been sold out. But the dealers have taken a substantial hit, even though we get part compensation.”

Vinay Saboo of RKS Motors, said: “One of the big advantages of Telangana and Andhra Pradesh is that the Road Transport Departments have computerised interfaces. This has enabled quick online (temporary) registrations of vehicles. They can then get it registered even after April 1. However, the situation will be different in States where there are no online interfaces.”

In fact, in some of the showrooms the rush was such that they had to down the shutters and allow people one by one.

Prashant Saboo, who has dealerships of Suzuki and Yamaha in Hyderabad, said: “There has been a huge demand for bikes as this is a once-in-a-lifetime offer. For us, companies have been gradually reducing BS-III vehicles from January and we did not have a large stock. Even our showroom staff picked up some.

“Interestingly, we had enquires on whether there were similar discounts on cars, too (the company deals in Hyundai). Imagine how a person would feel if he had purchased a similar model at a higher price three days ago.”

According to research firm Crisil, 6,70,000 two-wheelers in BS-III stock represent half-a-month of sales, aggregating about ₹3,800 crore. The BS-III inventory level for Hero is at about 3,30,000 vehicles compared with 80,000 for Bajaj. “We are offering discounts ranging from ₹10,000-20,000 on various two-wheeler models,” Pravin, a two-wheeler dealer at Scan Auto, in Mumbai said.

A four-wheeler dealer said the company won’t take back the unsold stock as invoices have already been prepared. “I am considering dismantling the two car models in my showroom and selling the spares. New spares sell at high rates. I will be able to reduce my losses substantially,” he said, requesting anonymity.

About 13 per cent of total sales for both commercial vehicles and two-wheelers come from exports. “It would take around a year for CVs and three months for two-wheelers to liquidate the entire BS-III stock,” Crisil said.

However, given its high inventory and minuscule share in exports, Hero could take up to 1.5 years, the report added.

RTO offices in Mumbai were open till late evening in a bid to meet the rush. According to one dealer, unsold BS-III inventory were being registered in the name of family members to meet the deadline. “Since BS-III vehicles won’t be registered after tonight we are getting the unsold vehicles registered in the name of friends and family. There is no issue if we have to change the ownership later,” said a dealer in North Mumbai.

Transport Commissioner of Maharashtra, Praveen Gedam, told BusinessLine that in the past two days registrations of two-wheelers have risen three times.

Regional Transport Offices across the State have been ordered to be open until midnight to serve the rush of people wanting to register the vehicles.

An RTO officer at Worli RTO office in South Mumbai said there is a massive increase in the workload as executives of motor vehicle companies are standing in long queues. As each executive is carrying more than 40 forms, the processing is taking time. “But we will try and accommodate as many applications as possible,” the officer said.

(With inputs from R Balaji and G Balachandar, Chennai; V Rishi Kumar, Hyderabad; Rashmi Pratap and Rahul Wadke, Mumbai)

Published on March 31, 2017

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