The ban on the sale of BS4 vehicles is a change highly anticipated for the Indian automotive industry but regulating this imposition at the ground level has been a difficult task, to say in the least. As the deadline approaches, it appears a new development has surfaced.
While the automakers have been resolutely working to exhaust the existing BS4 stocks, the nearing deadline creates an atmosphere of fear. The dealers fear they could incur heavy losses if unsold stocks remain. Interestingly, they have come up with a unique way to speed up sales and get away with selling BS4 vehicles post-deadline.
If any unsold BS4 stocks remain by the end of the month, the dealers have the option of converting them into pre-owned cars and sell them at the price of a used car. This can be done by getting the vehicle registered in someone’s name so as to make it a “used’ car. A top dealer of Maruti Suzuki from the south said, “Yes, the option of registering the vehicle in somebody’s name is always there. It then becomes a used car and ready for resale. This is a completely legal practice and was done during the BS 3 to BS 4 transition as well. Discounts on such vehicles depend entirely on the stock the dealer has”.
The cars can be registered under an individual or a firm’s name and thus the resale will be of a “used” car, which currently is a restriction that does not come under the ban imposed. According to a senior executive, “The most prudent thing for the dealer to do with the BS 4 car after April 1 is to register it as a used car before selling it. It might fetch a little lower than a first-hand (new) BS 4 could but the customer gets a fully new car with zero kilometers clocked.” Of course, this strategy still spells out losses for the dealerships but can be considered lesser of the two evils.
Even after taking measures to halt the production of BS4 vehicles, the stocks remain. It is an innovative way to liquidate inventories since the BS 4 stocks cannot be upgraded to BS 6 and manufacturers would refrain from exporting them due to regulatory limitations in export markets.
“Companies have different strategies to work with and the possibility of scrapping brand new BS 4 vehicles is quite less. We are encouraging the dealers to pick up BS 4 vehicles, register them and have a second sale. The dealer will have a huge arbitrage selling it to a customer who will value the BS 4 product because the BS 6 is going to be so expensive. There are financiers who are willing to fund those vehicles too. It’s a win-win for all”, said a senior executive with one of the top five commercial vehicle manufacturers.
The shift, which is already in place, will be strengthened by this move. Hopefully, this hack will help to boost sales before April 1!