Only 50% of BS-III inventory of commercial vehicles sold, say dealers

This, while two-wheeler industry made a killing by offering cash benefits to get rid of inventory

While two-wheeler inventory sold out almost completely before the end of Supreme Court deadline of March 31, commercial vehicle could sell only around 50 per cent of their inventories. 

John K Paul, president of the Federation of Automobile Dealers Association (FADA), confirmed the numbers.

Queried about dealers' profitability that might be hit due to heavy discounts, he said the discounts are given by the OEMs and so it will not have any impact on dealers. "Dealers wouldn't have sold in loss," said Paul.

The key reason lack of commerical vehicles' sales was that it is the end of the fiscal year and customers wouln't have money. Some of the OEMs even gave credit of upto 30 days for some of the large fleet operators to clear the inventories and discount level ranged from Rs 1.5-5 lakh, depending on the model. This is over and above regular discounts.

A senior official from Ashok Leyland said that while it is a setback for the industry, the company is very confident that it could get rid of the inventories, which was around 10,000 units at the time the Apex Court order came. The company officials said that it has options including exporting portion of the unsold inventories.

The company also decided to recall some of the BS-III vehicles and upgrade them to BS-IV as it feels cost of switching over will be less for all vehicles unlike peers.

SIAM President and Ashok Leyland's Managing Director Vinod K Dasari said that an OEM will have 4-6 weeks of inventory, dealers will have 2-4 weeks of inventory and the customers take about 4-6 weeks to convert it into a vehicle before it is registered. That means anywhere between 10-16 weeks of inventory and on an average there are around 60,000 CVs sold in India a month. This would mean a 150,000 vehicles for a normal pipeline of 10-16 weeks. "We have committed to bring this numbers down to 75,000, which is half of the lowest level of inventory," he said.

On top of it, about half of this inventory is now allowed to be registered, if it is sold before the SC order. This will leave the industry with 35,000 vehicles.

Supreme Court has agreed that while they can't sell but can register whatever has been sold and that would take care of the rest of the inventory, he said