NGT ban: Automakers fear big losses; seek clarity from govt

Confusion reigns supreme over delivery of stock of diesel vehicles that have already been booked

Automakers fear an immediate loss of 'hundreds of crores of rupees' due to ban on new diesel vehicles in the national capital, as confusion reigns supreme in the industry over delivery of already-booked inventory.

The companies want the government to immediately clarify about registration and delivery of the vehicles for which the customers have already made part or full payments, even as they also stare at huge losses in form of the inventory they had lined up for year-end sales -- typically a period when industry doles out big discounts to clear the inventories.

The auto industry was jolted into this 'confused' state after the National Green Tribunal (NGT) on Friday ordered an immediate ban on registration of diesel-run vehicles in Delhi as also on renewal of registration of such vehicles which are more than 10 years old.

According to the industry estimates, the order has led to an immediate impact on 'thousands' of diesel vehicles, including high-end cars, that have already been booked by the customers in Delhi by making full or part payments and the process was underway to deliver those vehicles and get them registered.

The exact number of affected vehicles could not be ascertained immediately, while many more 'thousands' of diesel vehicles would also have to remain in godowns as the companies would not be able to sell the inventory they had lined up for year-end sales. Industry estimates suggest this would mean possible losses to the tune of hundreds of crores of rupees.

Most automakers effect price hikes in the month of January, due to which many customers tend to buy the vehicles in the year-end period when discounts are also available.

The automakers, however, are hopeful that the government, while implementing the NGT order, will take into consideration the fate of all the vehicles which were already in the showrooms before the ban was ordered on December 11.

"As far as instruction to dealers is concerned, we are confused. We don't know what we have to do in Delhi," Mahindra and Mahindra Executive Director Pawan Goenka said.

When contacted, Maruti Suzuki India Chairman R C Bhargava said he would first like to look at the order in detail before commenting anything on the matter.

According to an auto sector analyst, around 1,400-1,500 vehicles are registered daily on an average in Delhi, out of which around 30 per cent are diesel-run.