Scooter, motorcycle prices likely to increase 6-8% after March 31; here's why

Two-wheeler prices in the country may see a revision upwards soon as the deadline to switch to Bharat Stage IV emission norms looms. 

The government has given the automakers until March 31 to make the switch to BS IV compliant vehicles. 

While most of the carmakers are already ready with BS IV inventory, Shrikant Akolkar, Research Analyst, Auto and Auto Ancillary, Angel Broking, said, "the 2W and commercial vechicles would see price revision in the range of 6-8% post the implementation of BS-IV norms."

He also added that the upcoming BS-IV standards' deadline is likely to have a neutral impact on the sector overall. "Most passenger vehicle makers are already following the BS-IV norms hence we expect no impact of BS-IV implementation on the PV segment."

There is however one big Supreme Court order that carmakers and dealers are staring at. One which may lead to a loss amounting to crores of rupees and about 1 lakh vehicles and many jobs. 

The SC had issued an order which seeks to ban the sale of BS-III vehicles after April 1. According to a report by the LiveMint quoting the Federation of Automobile Dealers Association or Fada, this would lead to a loss of 900,000 vehicles which are already in stock with about 20,000 dealers in the country. 

The Fada has filed an intervention petition with the SC to review its ban order which was called by the Environment Pollution Control Authority (EPCA).

Several carmakers already have BS-IV ready vehicles, with the others introducing the upgraded fuel-compliant engined vehicles. All the two-wheelers offered by Suzuki are already BS-IV compliant, with the two-wheeler manufacturer launching the Suzuki Let's and Hayate EP earlier in the month. It has already updated the New Access 125 and Gixxer series to meet the emission norms put forth by the government.

However, according to the report, the car and motorcycle dealers have substantial stock of BS-III vehicles and there's no provision for them to return them to the carmakers, which means, if the apex order stays in place, it would make the sale and registration of about 900,000 new BS-III compliant cars unlawful.

In the meantime, the SC had asked the Society of Automobile Manufacturers (SIAM) to submit the details of month-wise data of unsold BS III vehicles made after December 2015 by March 24.

Within the sector, the stakeholders are divided on their views about the March 31 deadline. While some hope for a postponement, Daimler India Commercial Vehicles, Managing Director and CEO Erich Nesselhauf had said in a statement on February 16, "There is no acceptable reason for any delay as everyone in the industry had enough time to get ready for the transition. It should not be diluted by commercial interests." Daimler had said it will shift the production of BharatBenz trucks in March to "vehicles equipped with state-of-the-art BS-IV technology only."

According to the aforementioned LiveMint report, Bajaj Auto in a petition earlier this month, had demanded that the manufacture and sale of BS III vehicles should be stopped after April 1.

Bajaj, in a February 15 statement had said it was ready to comply with the EPCA order of neither selling nor registering pre-BS-IV vehicles from April 1, 2017. In it, Bajaj said its entire range of two- and three-wheeler portfolio manufactured from January 2017 met the stringent BS-IV norms. "It is probably the first automobile company to completely meet BS IV norms well before the April 1, 2017 deadline." 

Bajaj Auto Managing Director, Rajiv Bajaj went a step further and requested the authorities to not grant any amnesty to bail out the companies who don't changeover on time. "All those who do not changeover on time will commercially benefit by selling their products at a lower price in case the amnesty is granted. Therefore, the manufacturers who have followed all directives in letter and spirit will actually end up being penalised." 

"The company feels that the authorities should send strong message by not giving any amnesty and if at all any short-term amnesty is given, it should be accompanied by a sizeable financial penalty on a per vehicle basis on all BS III vehicles registered after 1st April 2017 to discourage this practice in future," the statement read.

The Maruti car which was deemed to have revolutionalised the Indian automobile market - the 800 - was phased out after decades on sale, as the carmaker had no plans to upgrade it to BS IV standards. The phase out of the popular Maruti 800 started in April 2010. Of course, declining demand and sales of the car was also a contributing factor. 

Will the Supreme Court deliver in favour of the car dealers? Angel Broking's Akolkar says, "The inventory of BS-III compliant vehicles remains an issue and court ruling on the same should clear the air."