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Auto stocks decline after Supreme Court verdict on BS-IV vehicles

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Capital Market

Shares of companies in the auto sector fell 0.08% to 4.81% after the Supreme Court (SC) on Friday rejected Federation of Automobile Dealers Associations (FADA)'s application to extend 31 March 2020 deadline for BS-IV vehicle sales.

The Nifty Auto index slipped 0.49% to 7,783.50, underperforming the benchmark Nifty 50 index which was down 0.16%. The Auto index has fallen 1.89% in three sessions.

Hero MotoCorp (down 2.8%), TVS Motor Company (down 0.88%), Bajaj Auto (down 0.87%), Mahindra & Mahindra (down 0.87%), Tata Motors (down 0.8%), Escorts (down 0.28%) and Eicher Motors (down 0.08%) declined. Ashok Leyland (up 1.18%) and Maruti Suzuki India (up 0.13%) advanced.

 

Among the auto part makers, Sterling Tools (down 4.81%), Automotive Axles (down 4.48%), Subros (down 3.47%), Lumax Auto Tech. (down 2.78%), Munjal Showa (down 2.32%), Rane (Madras) (down 2.32%), GNA Axles (down 2.22%), Minda Inds. (down 2%), Mahindra CIE (down 1.84%), Rane Holdings (down 1.7%), Steel Str. Wheel (down 1.22%) and Motherson Sumi Systems (down 0.65%) edged lower. Z F Steering (up 4.06%), Minda Corp (up 2.52%) and Rane Brake Lin. (up 0.95%) edged higher.

SC on Friday (14 February) heard the application of FADA with respect to granting extension for sale and registration of BS-IV vehicles beyond 31 March 2020. The apex court, however, did not consider FADA's application for extension of selling and registering BS-IV stock vehicles beyond the stipulated deadline.

Commenting on the order FADA President Shri Ashish Kale said "Hearing FADA's plea, SC did not consider our appeal for extension of sale deadline for Stock vehicles and reconfirmed on their Oct'18 order of 31st Mar'20 as the deadline for sale and registration of BS-4 vehicles. Considering the long downturn which has lasted well over a year now and the current Dynamic demand situation, selling 100% of the BS-4 vehicles Currently in stock with our Members by 31st of March is a tough task.

FADA hence appeals to all OEMs to Shift Completely to BS-6 vehicles for all Wholesale Despatches to Dealers and stop further billing of BS-4 vehicles with immediate effect to Dealers thereby helping liquidation of Current BS-4 Inventory for a Smoother Transition to BS-6."

In an internal message circulated to dealers, FADA President also advised dealers to plan liquidation of BS4 inventory as per 31 March 2020 deadline for sale and registration of BS-IV vehicles.

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 (including buses and trucks) and tractors.

Meanwhile, India Ratings has reportedly placed a negative outlook on the auto sector as it expects flat-to-low single-digit growth in auto volumes next year, after falling in double digits so far this fiscal year.

Vehicle sales across categories registered a decline of 13.83% to 17,39,975 units from 20,19,253 units in January 2019, as per the data from automobile industry body Society of Indian Automobile Manufacturers (SIAM). Domestic passenger vehicle sales declined 6.2% to 2,62,714 units in January, it added.

Car sales in January dropped 8.15% to 1,64,793 units, while motorcycle sales declined by 15.17% to 8,71,886 units compared to year-ago. Total two-wheeler sales in January slipped 16.06% to 13,41,005 units year-on-year (YoY). SIAM said sales of commercial vehicles were down 14.04% to 75,289 units in January 2020.

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First Published: Feb 17 2020 | 11:37 AM IST

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