"CV (commercial vehicle) OEMs (original equipment manufacturers) are now sitting on sizeable stock of unsold inventory, which is worth approximately Rs 46-58 billion," the rating agency said in a report.
"We believe exports of these vehicles to nearby markets where emission norms have still not progressed to Euro-IV or equivalent appears to be the most suitable option available with OEMs as upgradation to BS-IV has limited possibility."
The report said the technology to meet BS-IV norms has undergone a significant shift. In case of CVs, the engines technology has moved from largely mechanical to electro-mechanical.
"Apart from changes in engine technology, the exhaust system has also been upgraded to either exhaust gas re-circulation (EGR) or selective catalytic reduction (SCR) technology to achieve higher reduction in Nox levels under BS-IV," the report said.
In a setback to the automobile industry, the Supreme Court ban on the sale and registration of BS-III vehicles just two days prior to the implementation of new emission norms on April 1 resulted in the sizeable stock of BS-III vehicles lying unsold.
Besides, there was a sharp contraction in earnings on account of deep discounts extended to clear existing inventory and costs associated with re-calls and possible upgradation to BS-IV norms.
"According to industry estimates, the CV industry had approximately 95,000 BS-III vehicles in March 2017, of which they were able to clear only 50,000-60,000 units (or 55-65 per cent) in the last two days of the fiscal 2017 despite sharp increase in discounts (ranging between 10-30 per cent) offered by OEMs as well as dealers," the report added.
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
Doraiah Chowdary Vundavally is a Software engineer at VTech . He is the news editor of SocialNews.XYZ and Freelance writer-contributes Telugu and English Columns on Films, Politics, and Gossips. He is the primary contributor for South Cinema Section of SocialNews.XYZ. His mission is to help to develop SocialNews.XYZ into a News website that has no bias or judgement towards any.
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