III ban: Auto stocks fall up to 3% after Supreme Court order

Environment Pollution Control Authority’s or EPCA’s plea comes days after Bajaj Auto filed a similar petition before the apex court to stop the sale of BS-III vehicles even as several auto makers have such vehicles in their inventories

Environment Pollution Control Authority’s or EPCA’s plea comes days after Bajaj Auto filed a similar petition before the apex court to stop the sale of BS-III vehicles even as several auto makers have such vehicles in their inventories

Banning the sale, the court said the health of the people was "far far more important than the commercial interests of the manufacturers".

The Supreme Court on Tuesday reserved its order on a plea seeking ban on the registration of BS-III emission vehicles from April 1, 2017, even as automobile manufacturers opposed the plea saying they needed a window to exhaust their existing inventory of BS III vehicles.

During the hearing, the Centre too informed the court that automakers were allowed to clear unsold stocks after the cut-off date when BS III & BS IV norms were introduced, so it was impractical technically and financially to convert BS III vehicles to BS IV.

The court indicated the option that it might exercise after amicus curiae Harish Salve told the court that despite knowing well in advance that no vehicle other than those complying with BS IV norms would be registered from April 1, 2017, the automobile manufacturers kept on producing those unabated.

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They have approached the apex court to dispose of their stock as the BS-IV emission norms are to come into force from April 1 this year. Auto market leader Maruti Suzuki is least affected by the order and has been making BS-IV vehicles since 2010. They now will have to offer steep discounts, ship products to BS-III export markets or invest to upgrade their products to BS-IV.

India's top court has asked the affected vehicle manufacturers to use the remaining days in March to try and sell any inventory of the said vehicles. "The main issue for the industry was the availability of BS-IV fuel across the country", Vinod Dasari, managing director at Ashok Leyland and president, Society of Indian Automobile Manufacturers, was quoted in PTI.

The emission norms helped in bringing down the level of pollution significantly whereas there were increase in vehicle cost due to improved technology. We have worked relentlessly for more than a year to be fully BS-IV ready on April 1. Total losses on two-wheelers would amount to Rs 2500 crore, while losses on trucks would stand as Rs 25000 crore is sale of BS III vehicles is banned on 1st April, according to SIAM data. He said that the damage to some of the auto companies could be more than it was anticipated.Also, companies like Tata Motors and Mahindra that do not have an overseas market for their vehicles will face a hard time as selling abroad was the only option for the unsold inventory.

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