Auto stock prices tumble in the wake of SC ruling on BS-III vehicles

Auto sector stocks took a hit on the bourses on Wednesday after the Supreme Court ruled that it would not allow the sale or registration of vehicles manufactured under BS-III emission standards after

CHENNAI: Auto sector stocks took a hit on the bourses on Wednesday after the Supreme Court ruled that it would not allow the sale or registration of vehicles manufactured under BS-III emission standards after April 1. With more than 8.2 lakh BS-III vehicles still stuck in inventory as late as March 20, auto sector stocks fell by as much as three per cent during the day. The BSE Sensex Auto Index fell 0.49 per cent.
The biggest loser during the day was Hero Motocorp, which according to data submitted by the Society of Indian Automobile Manufacturers, accounts for 2,97,577 units (44.33 per cent) of BS-III inventory in the two-wheeler segment. Stock prices fell by 3.15 per cent at the end of the trading day.

Meanwhile, other losers included Ashok Leyland, which fell 2.78 per cent. The Chennai-based commercial vehicle major accounts for 18.04 per cent (17,449 units) of existing BS-III inventory in the commercial vehicles segment. Bharat Forge (1.30 per cent), Tata Motors (0.70 per cent), Mahindra & Mahindra (0.66 per cent) and Maruti Suzuki (0.58 per cent) all with significant impact predicted on financials due to the verdict also fell.

“The market had started on a positive note but volatility emerged during the day due to verdict of Supreme Court banning sale and registration of BS III vehicles,” said Vinod Nair, head of research at Geojit Financial Services.

However, Shrikant Akolkar, Research Analyst, Auto & Auto Ancillary, Angel Broking said that passenger vehicle manufacturers have already started to manufacturer BS-IV compliant vehicles and “hence we do not expect any big impact on passenger vehicle manufacturers.”