Commercial vehicle (CV) manufacturers are now exploring the option of converting their inventory of banned Bharat Stage III (BS-III) vehicles into being BS-IV compliant, but there is uncertainty about whether the upgrade is viable.
At least two of the top three commercial vehicle (CV) players in India have said that they could look at upgrading the unsold stock to BS-IV standards and are examining its economic viability.
The Supreme Court had last week banned the sale and registration of BS-III vehicles from April 1. On March 27, a counsel appearing for one of the manufacturers told the Supreme Court that converting BS-III stocks to BS-IV was not possible even as the cost was considered to be secondary.
But a source at Chennai-headquartered Ashok Leyland, the country’s third largest CV producer, said that it was possible to upgrade the BS-III units to BS-IV and that the company is looking at that option, though a final call is yet to be taken.
“There is fine tuning of the EGR (exhaust gas recirculator) one has to do to bring it on par with the EGR of BS-IV. But this the most basic way, depending on the model there could be other complexities involved”, said the source.
Ashok Leyland has between 5,000-10,000 units of unsold BS-III stock collectively worth around Rs 1000 crore, say dealer sources. These are being bought back by the company from the dealers who were doling out discounts in the range of Rs 50,000-200,000 to get rid of the stocks before the April 1 deadline.
Similarly, Mahindra & Mahindra, the country’s second largest CV maker, has said that though upgrading to BS-IV standards will not be easy, it can certainly be done.
Speaking to CNBC-TV18, Pawan Goenka, Managing Director of Mahindra & Mahindra, said, “It is not simply a question of converting from BS-III to BS-IV because when you go from BS-III to BS-IV, sometimes, it is just an engine modification, in which case we can do it fairly easily. But in other cases, it is an engine replacement and if it is engine replacement, it is also a chassis change, it is also a wiring harness change. So, I do not have an exact number right now, but we are doing the calculations and we are looking to see which bucket each vehicle falls in.”
Tata Motors, the country’s biggest CV maker, is believed to be holding the largest stock of unsold BS-III inventory at around 20,000-25,000 units. While the company has said that it will explore the option of exporting the unsold lot, it also clarified that upgrading them to BS-IV was not possible.
Speaking to Moneycontrol on the sidelines of the launch of the Tigor sedan, Guenter Butschek, Managing Director at Tata Motors, said, “I disagree with what I read that is was possible to move BS-III vehicles to BS-IV. Let me tell you that is not possible. So one of the solutions we can look at is exporting the BS-III stock.”
VE Commercial Vehicles, the joint venture of Eicher Motors and Volvo, has an unsold BS-III inventory of 1700-2000 units. The company has not clarified what it intends to do with the stock.
A CRISIL report estimates the remaining 40,000-45,000 units of unsold inventory to be returned in the upcoming months. These mainly comprise less-popular models since there were instances of supply shortage in some popular BS-III models.
"The truck makers are likely to adopt a mix of the following steps to manage unsold BS-III inventory - upgrading them for resale, dismantling vehicles for spares or incur higher working capital for holding the inventory until it is exported (which could take 5-6 months)," read the report.
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