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Apr 19, 2017 11:34 AM IST | Source: Moneycontrol.com

Heard on the street: How automakers sold BS 3 vehicles even after March 31 deadline

Despite wide-spread publicity there was no total exhaustion of stock by the deadline imposed by the Supreme Court. Offering as much as 40-50 percent discounts, some models of unspecified lot, remained unsold by March 31.

Heard on the street: How automakers sold BS 3 vehicles even after March 31 deadline

Swaraj Baggonkar

Moneycontrol News

The Supreme Court's decision on March 29, declining to postpone the ban on sale of BS III vehicles from April 1, may have kickstarted a fire sale on the last two days of the last fiscal but it appears two-wheeler makers may have also resorted to some underhand tricks to liquidate unsold stock.

The auto industry sold about 6 lakh units, mainly two-wheelers, on the last two days of March, nearly half of the 1.4 million monthly units it sells on average in the country. (There were about 6.71 lakh unsold BS III two-wheelers as of March 20, as per SIAM).

This was after dealers were asked by companies to offer mouth-watering discounts to liquidate BS III stock, ranging from Rs 10,000 for a standard motorbike to a couple of lakhs for a sportsbike.

Despite the rush, some models of unspecified lot remained unsold by March 31.

A source told this reporter that at least one two-wheeler major had asked its dealers to back-date insurance policies. These policies, which were limited to only one year (as asked by the manufacturer), were sold well into the first week of this month.

Back-dating is when the seller puts an earlier date on the document than it was originally drawn up to make the transaction legal. It is one of the often used fraudulent means of transacting business.

As per the SC order, only those vehicles, which were legally sold before close of business on March 31, 2017 would be eligible for registration at the regional transport offices (RTOs).

An insurance certificate needs to be submitted to the local RTO office for registration of vehicles, without which they will not be eligible to ply.

Going by the SC order, RTOs stopped accepting BS III vehicles for registration after April 1 if the vehicle did not have an insurance certificate that is issued before April 1, according to one company official.

Other two two-wheeler makers faithfully issued a circular earlier this month, outlining a procedure for dealers to send unsold vehicles back to the factory.

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The scene at commercial vehicle (CV) dealers was not different either. Saddled with stocks of more than four months with average price of Rs 12.5 lakh each CV dealers were the worst hit by the SC ruling.

A large CV dealer from north India selling truck and buses of a noted manufacturer said it was talking to the manufacturer to explore options regarding the unsold BS-3 stock -- one of which could be back dating of documents.

As per estimates by there were anywhere between 40,000-45,000 unsold trucks and buses by end of March 31, 2017 between all manufacturers. These are estimated to be worth over Rs 5000 crore.

Manufacturers have officially said that such unsold stock will be bought back to be reengineered for upgrading to BS-4 or to be exported to BS-3 markets.
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