Supreme Court may impose additional costs on BS-III sales

The Supreme Court has asked automobile companies not to overrule the government's initiative to check increasing levels of pollution, by selling BS-III vehicles, which they are holding in stock. Automakers are prepared to comply with the new norms, but they are opposing the Supreme Court appointed Environment Pollution (Prevention and Control) Authority (EPCA) over the cut-off date of April 1, 2017, since many finished products are with dealers. 

During the hearing, the bench may either ban registration of BS-III vehicles or allow their registration, but may ban use of such vehicles in major cities or ask the companies to pay costs for creating health hazards, and reimburse the Centre which spent enormous money in upgrading fuel standards. The final order is awaited today. 

Automotive companies hold about 20-30 days’ inventory of BS 3 vehicles (2W companies have about 20 days of inventory while CV players have inventory of about 1 month), and may have to take inventory write down or may have to sell inventory at higher discounts. This move will put pressure on auto OEMs, excluding Maruti Suzuki, as it has no inventory of BS-III vehicles.