Two-wheeler companies saddled with over Rs 2,500 crore BS-IV inventory Due to Covid-19 lockdown

Updated on: 2 years ago, By ibb team

Two-wheeler companies saddled with over Rs 2,500 crore BS-IV inventory Due to Covid-19 lockdown

As markets go quite due to severe restrictions around coronavirus, two-wheeler companies are left with BS-IV inventory worth over Rs 2,500 crore with little hope around liquidating it, despite heavy discounts. Dealerships are shut, many states are under lockdown or even curfew, and people have been instructed to curtail non-essential movement, reducing footfalls to nearly nil.

Dealers of Hero MotoCorp, Honda Motorcycle and Scooter India, TVS Motors and even Bajaj Auto are understood to be carrying BS-IV inventory just as the deadline to compulsorily liquidate the stock nears. From April 1, the BS-VI emissions guidelines come into force, prohibiting companies from selling BS-IV vehicles.

Companies such as Hero Moto and HMSI, and dealer association FADA, are now approaching the Supreme Court for relief in liquidating the stock beyond April 1.

One estimate puts the number of the piled-up inventory at around 4.5-5 lakh units with unsold vehicles lying at dealerships across the country, including in states such as UP, Haryana, Karnataka, Punjab, Maharashtra, Gujarat, and Delhi.

"We are simply saying that give us at least three months to sell the stock which is already in the market. No fresh BS-IV stocks are being produced, or dispatched," Niranjan Gupta, CFO of Hero Moto, told TOI. Till last week, the company had stock of around 2 lakh units.

YS Guleria, senior VP at HMSI, said that over 90% of the retail network is currently shut. "Things are tough and no one knows when the lockdown will be lifted."

Economic slowdown and tight liquidity situation had already impacted the two-wheeler dealers very badly in the current fiscal, and the fresh trouble has only made matters worse.

"It is a very challenging situation and things have evolved quite fast. The escalation of lockdown was not anticipated by anyone," Hetal Gandhi, director at Crisil Research said.

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