What was the actual impact of change in emission norm on Ashok Leyland ?

After all the rumors about the huge impact of change in emission norms on the auto industry, Ashok Leyland has come up with the exact figures that shows the actual impact of BS IV emission norms on the sales of the company. Management of Ashok Leyland commented about the impact of change in emission norms on the company in a recent investor conference call, held on April 10, 2017.

Management in the investor conference call highlighted the plans and actions followed by the company to reduce the impact of the change in emission norms. The management said that there were around 10700 unsold inventories of BS III vehicles. Out of which 1000 vehicles were with dealers (9700). From the remaining 9700 inventory, 2000 units will be exported and the remaining will be converted into the BS IV compliant vehicles.

Company has successfully enhanced the limit of (EGR ) exhaust after treatment, from 130 cc to 230 cc. Through this the company can convert the BS III inventory to BS IV inventory, installing EGR and changing wiring, while harnessing on the same BS III engine platform. The company can slot out BS III engine and put back BS IV engine. EGR costs around 10% of vehicle cost, which company will recover by selling BS IV trucks. Company also mentioned that by doing this there will be around 8700 BS III engines that will be pulled out.

Ashok Leyland had sold around 550000 BS III vehicles, out of which around 5%-10% are replaced every year. The total annual market for these engines is expected to be around 50000-60000 units of engines. The company is confident of selling these BS III engines in after sales market.

Overall the company expects to have minimal impact of change in emission norms.