This week in Auto: Will scrappage scheme ever see the light of the day?

In trying times, the corporate world around the globe looks up to their respective governments to step in and create some magic. Several auto companies felt helpless watching their factories sit idle as some critical parts from China were not made available in time. In India, truck and bus makers are looking at the government to roll out a scheme it had promised years ago. More on this later in the copy, but here is a complete list of all the major developments in the auto space this week.

Tata Motors warns of JLR profit

Indian automaker Tata Motors has warned of lower profit at its British luxury car brand Jaguar Land Rover (JLR) for the fiscal year as sales in China have taken a hit because of the coronavirus outbreak.

The outbreak has hit JLR's retail sales in China and is expected to lower the luxury carmaker's full year EBIT (earnings before interest and tax) margin, Tata said in a statement.

Dealers running low on BS-IV cars

India’s top six car-makers, which control more than 80 percent of the volumes, saw a decline of nearly 7 percent in February sales, even as the countdown began to exhaust Bharat Stage IV (BS-IV) stocks before the deadline.

Car and SUV makers clocked sales of 221,369 units during February as against 237,768 sold in the same month in 2019 . Dealers have been liquidating BS-IV stocks to avoid getting stuck with them post the deadline of March 31. From April 1, only BS-VI vehicles will be allowed to sell.

Coronavirus outbreak affecting parts supplies

Tata Motors, Mahindra and Mahindra (M&M) and MG Motor India on Sunday said they are facing challenges in terms of component supply from coronavirus hit-China.

M&M has reported a 42 percent decline in total sales at 32,476 units in February."...because of the unforeseeable challenges on the parts-supply from China, our BS-VI ramp-up has been affected," Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division, M&M Ltd said in a statement.

Fiat to sell electric cars, SUVs

FCA India, the smallest car maker in the country, is planning electric vehicles and fully imported SUVs as part of its new model line-up, a top company official told Moneycontrol.

While there is no India-dedicated work on EVs going on at present, the official said that FCA is working on battery-powered vehicles at the international level, and those products may be brought to India.

VW Tiguan Allspace launched in India

After showcasing the Tiguan Allspace for the first time at Auto Expo 2020 in February, Volkswagen has launched the SUV in India at Rs 33.12 lakh (ex-showroom, pan-India).

Volkswagen Tiguan Allspace comes to India via the complete build up (CBU) route in limited numbers. It replaces the five-seater Tiguan, which has been on sale in the country for some years.

Honda Africa Twin launched at Rs 15.35 lakh

In a bid to comply with the upcoming 2020 Euro norms, Honda has made some major changes to its CRF1100L Africa Twin motorcycle. Along with a new engine, it has shed a few kilos in its new avatar.

The motorcycle gets a new 1084cc, parallel-twin-cylinder engine. Honda has increased its displacement by lengthening its stroke. The new engine makes a maximum power of 102 PS and peak torque of 105 Nm. This is an increase of 6.8 PS and 7 Nm over its previous generation.

No sight of any vehicle scrappage policy yet

The government has yet again missed a deadline for introducing the scrappage incentive scheme, that it promised to roll out for obsolete or end of lifecycle commercial vehicles.

The scheme that supposedly encourages owners of old trucks and buses to upgrade to vehicles that have the latest technology such as Bharat Stage VI (BS VI) has been stuck for ages.

First mooted by transport minister Nitin Gakari way back in mid 2015, the scheme was believed to be in the final phase getting drafted in November 2019. The minister even promised its roll out before end of February 2020. But so far there has not been any news of a roll out.

Truck makers have been anxiously waiting for the scheme to be rolled out hoping that it would give demand some lift which has otherwise been extremely disappointing for past several quarters.

“We have been hearing about the scheme’s roll out for not just past several months, but several quarters. We have now come to live with the present instead of pinning our hopes on the scheme. If it comes (then) its great but we fear there could be riders to avail the benefit”, said managing director from one of the top five truck and bus makers in India.

Though there is no draft paper put forth for evaluation it is believed that vehicles which are older than 15 years will be benefiting from the scheme. However, large and medium-size fleet operators have an average age of the truck or bus to be less than 10 years. Most of the trucks above this are owned by small operators, who have one or two vehicles.

Sales of medium and heavy commercial vehicles (MHCV) dropped by 36 percent to 198,736 units during April-January as per data shared by SIAM. Companies and their dealers are desperately cleaning up their BS-IV inventory before the April 1 deadline.

The rise in acquisition cost of a new BS-VI truck and bus would impact demand, which is expected to remain subdued till the end of the second quarter. The scrappage scheme would have thus helped the industry tide over the trend, believe manufacturers.

With limited financial resources or reluctance to commit to new asset purchase, such small operators would not opt for the scheme unless the same is made mandatory.

There are an estimated 28 million vehicles on Indian roads that were more than a decade old, as per the government. Some of these highly polluting trucks and buses do not even conform to any emission norm, meaning they were built even before Bharat Stage 1 norms were introduced.