India April Report
SC Bans Sale of BS-III Compliant Vehicles after April 1, 2017
In a major setback to the Indian automotive industry, the Supreme Court has banned the sale of Bharat Stage III (BS-III) vehicles after March 31, 2017. The automobile industry has an unsold BS-III vehicles stock of 8.24 lakh (824,000) units.
PSR Analysis: In the previous emission norms transition, the ruling mentioned a cutoff date for production and not for sale. In this ruling, the court changed its applicability to sales which perplexed the industry. Hence, all BSIII vehicles in inventory at the company or dealer level became non-saleable after March 31, 2017, setting an example of health over business. This will have a onetime material impact on the industry.
While the industry tried to mitigate the damage by discounting the vehicles and selling a majority of inventory before April 1, the impact of unsold inventory may not be more than 3% of the revenues, with the CV Segment being most impacted. Retrofitting BS-III vehicles with BS-4 kits may not be a feasible option, given technical challenges, additional costs, and potential quality issues. Hence, we believe, exporting may be the only cost effective solution available for OEMs, although it may take several months for these sales to be made, at a sizeable cost.
10,000th Vibratory Compactor Rolls Off the Line at CASE Pithampur Plant
CASE Construction Equipment India celebrates two major milestones: the production of its 10,000th vibratory compactor, and the highest monthly sales volume reached in its 25 years of operations.
PSR Analysis: The vibratory compactors are mainly used for road construction, irrigation projects and for making canals. With aggressive Government targets, road construction has gone from a rate of 13 kilometers per day of roads built in 2013 and 2014 to nearly 20 kilometers per day in the period between 2016 and 2017.
This has increased the demand for vibratory compactors, and CNH's capability to meet the hike in demand has allowed it to retain its leadership position in this segment. PSR
Jinal Shah is PSR Manager, South Asia Operations