Auto stocks rev up after FADA moves SC on BS-IV transition

Shares of 13 auto makers advanced 0.29% to 3.96% after auto body FADA moved to apex court to protect dealer members interest in BS-VI transition.

JBM Auto (up 3.96%), TVS Motor Company (up 3.11%), Eicher Motors (up 2.5%), Hero MotoCorp (up 2.4%), Mahindra & Mahindra (up 2.39%), Tata Motors (up 1.69%), SML Isuzu (up 1.26%), Escorts (up 0.81%), Atul Auto (up 0.76%), Force Motors (up 0.56%), Ashok Leyland (up 0.44%), Maruti Suzuki India (up 0.41%) and Bajaj Auto (up 0.29%) advanced.

Meanwhile, the S&P BSE Sensex was up 73.37 points or 0.18% to 41,631.94. The S&P BSE Auto was up 1.06% to 18,276.81, outperforming the benchmark Sensex.

The Federation of Automobile Dealers Associations (FADA) on Wednesday (18 December) approached the Supreme Court seeking directions to allow dealers to sell and register Bharat Stage IV, or BS IV-compliant vehicles, even after the more stringent BS-VI norms come into effect on 1 April.

The request for exemption has been made for stocks purchased from original equipment manufacturers (OEMs) before 1 March 2020.

Last year, the apex court had ordered vehicle makers to stop selling and registering BS IV vehicles from 1 April.

FADA President Ashish Harsharaj Kale said, "With the current timeline of all India BS-VI fuel availability of 1 April 2020, most manufacturers will shift to 100% BS-VI vehicle production only by end February 2020 or 1st week of March 2020.

Looking at this timeline of BS-VI production and the current fluctuating demand situation, despite putting in the best of efforts, there is a possibility that many of our members are not able to ensure 100% liquidation of BS-IV inventory purchased by them in the course of business before the deadline of 1 April 2020 fixed by the Supreme Court.

If the dealers are left with any inventory of BS-IV vehicles, many of them will face financial hardships which could even threaten the existence of their business. Hence, we have appealed to the apex court to allow us to sell and register inventory purchased before 1 March 2020, which remains unsold by the 31 March 2020 beyond the current deadline of 1 April 2020."

Founded in 1964, Federation of Automobile Dealers Associations (FADA), is the apex national body of automobile retail industry in India engaged in the sale, service and spares of 2/3 wheelers, passenger cars, UVs, commercial vehicles and tractors.

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