BS-III ban: Medium & heavy vehicles to face the brunt

Medium and heavy commercial vehicle manufacturers (M&HCV) will be most affected by the ban on BS-III vehicles starting Saturday. About 96,000 units of commercial vehicles (CV) with a value of Rs 12,500 crore may lie unsold on April 1, estimate analysts. The total value of inventory across all categories at risk is pegged at Rs 17,000 crore. The reason for higher inventories with CV makers is  six to eight per cent price difference between BS-III and BS-IV commercial vehicles. Given high discounts already offered, companies were of the view that fleet operators would buy more of these vehicles before the deadline. But clearly, that hasn't transpired as desired. Companies will have to now sweeten the deal further to entice buyers. Already reports suggest that companies will have to provide an additional five-eight per cent discount (over and above the prevailing discounts being offered) to buyers for clearing BS-III CV inventories. While analysts believe that Ashok Leyland will be impacted the most, the company’s management is confident that it will not have to take any write-off and will clear the inventory in the domestic market before the deadline, while unsold inventory will be exported. The other option is to retrofit the vehicle to BS-IV norms but that is considered too cumbersome and costly.