CHENNAI: While an estimated 400,000 units of Bharat Stage (BS)-III two-wheelers were in stock with dealers across the country as of the day of the Supreme Court verdict banning the sale of BS-III vehicles, dealers speaking to Express said that more than 90 per cent of the stock had been sold off during the last two days of March. These sales were largely driven by whopping discounts, sometimes reaching up to 60 per cent of the sticker price.
These sales, while disposing off inventory stuck with dealers, are likely to affect the balance sheet of two-wheeler makers – impacting margins for the last quarter. Earlier this week, Crisil Research had pegged the total loss to two-wheeler makers at Rs 480 crore.
“The large discounts offered by dealers and manufacturers (of two-wheelers) both saw 90-95 per cent of existing stock (with dealers) sold off during the last two days of March,” John K Paul, president, Federation of Automobile Dealers’ Associations told Express.
According to documents submitted by auto-makers to the Supreme Court, inventory of two-wheelers with dealers and manufacturers together accounted for 6.71 lakh units.
By the day of the judgment, dealers estimate this number to have reduced to four lakh units.
“While we offered some significant discounts, some dealers also added on with discounts of their own. They organised on-spot registrations and other services. We saw almost all stock with dealers exhausted by March 31 evening,” said a senior source in a leading two-wheeler maker. “But, most of the discounts are being borne by manufacturers,” added Paul.
CV inventory still high; only 35 per cent sold
However, while two-wheeler inventory has been drastically reduced through the fire-sale, and three-wheeler and four-wheeler inventory negligible on the date of the verdict, commercial vehicle dealers and manufacturers have had a tougher time.
“The nature of commercial vehicle sales do not allow fire-sales and discount driven volumes,” Paul had pointed out on the day of the verdict, and according to him, only 35 per cent of commercial vehicle inventory with dealers had been sold off during the last two days of March.
The loss is set to be much higher for CV makers, who will have to opt for either recall and exports, or recall and refitting -- both options that will add to substantial costs. Crisil Research had stated a few days earlier that the total loss to CV makers is estimated to stand at Rs 2,500 crore.