No amnesty for BS-III vehicles after April 1, says Bajaj Auto

Bajaj Auto announced that it is ready to comply with the Environment Pollution Control Authority's (EPCA) direction of neither selling nor registering any pre-BS-IV vehicle from April 1, 2017. The company says all its two- and three-wheelers manufactured from January 2017 meet BS-IV emission norms. The Pune-based manufacturer is probably the first Indian two-wheeler manufacturer to fully meet BS-IV norms well before the April 1, 2017 deadline.

A few other two-wheeler manufacturers like Hero MotoCorp and Honda Motorcycle & Scooter India (HMSI) have, over the past few months, launched BS IV-compliant models but compliance across the entire manufacturing chain is yet to be accomplished for most industry players.

 The Central Pollution Control Board had earlier confirmed that BS-III-compliant vehicles could not be sold or registered anywhere in the country from April 1, 2017. However, some automobile companies have requested that this deadline be extended.

Rajiv Bajaj, MD, Bajaj Auto, said, “Bajaj Auto as a responsible corporate has complied with this directive and had already commenced manufacturing of BS-IV-complaint vehicles from October 2016. Moreover, with effect from January 2017, all products from all our three plants are BS IV-compliant. We have thus ensured that all vehicles presented for registration from April 1 onwards will be BS-IV compliant. This has been possible because of meticulous planning for dealer stocks and switching over to production of BS IV-compliant vehicles well in advance.”

The company feels that the authorities should send a strong message by not giving any amnesty and if at all any short-term amnesty is given, it should be accompanied by a sizeable financial penalty on a per vehicle basis on all BS-III- vehicles registered after April 1, 2017 to discourage this practice in future.

It can be understood that vehicle manufacturers are looking for a reasonable extension of the deadline implementing BS-IV emission norms for existing vehicles from April 1, 2017. The primary reason backing this proposal, as per the reports, is the accumulating vehicle inventory (including dealer stocks) in the wake of declining sales due to demonetisation.

To this Bajaj argues, “All vehicle manufacturers maintain a standard inventory of four weeks. In my view, the impact of demonetisation was 20 percent YoY at worst. This means that an inventory of four weeks would now be 5 weeks or so. We still have six weeks to go until April 1, 2017. This is good enough time for industry players to drain their existing BS III compliant stock.”

According to him, Bajaj Auto began scaling up the activity of converting its existing models from BS III to BS IV emission norms in September last year. By end-January 2017, the company fully converted all its existing models as per the required mandate.

“This has resulted in a price rise of Rs 1,000-Rs 7,000 depending on the model(s), which we have already factored in; we have passed on the price hike to our customers and there is no impact on our margins,” he remarked.

He added, “It is also pertinent to point out that tightening emissions to meet BS IV norms comes at a substantial cost. All those who do not change over on time will commercially benefit by selling their products at a lower price in case the amnesty is granted. Therefore, the manufacturers who have followed all directives in letter and spirit will actually end up being penalised.”

Commenting further on his concerns, Bajaj said: “Vehicle manufacturers seeking extension of deadline is the result of primarily three factors – complacency, incompetence or a combination of both. If the government (concerned ministries) authorities grant any more extra time (months / weeks) to these industry players, our (Bajaj Auto’s) competitive advantage is eroded. The auto industry seems to have become used to taking the government for granted, and has, over time, created an image of being defensive and regressive. Plea to grant amnesty in this case is an example of this argument. However, in my view, the auto industry should have a confident image aligned with being called as a competent and world-class industry.”

Support from Toyota Kirloskar Motor 

Bajaj also voiced support from Vikram Kirloskar on this issue. “My friend Vikram Kirloskar also supports me in this perspective and stands firmly against stretching the deadlines. He, at Toyota, has also shifted all his products to the BS-IV emission norms. The government authorities must stand firmly and not extend the deadlines beyond April 1, 2017 in any case or else the seriousness behind BS VI norms would be questionable. Historically, whenever there is an opportunity to make an impact, the (auto) industry wants to drag its feet.”

Bajaj Auto has started work on preparing for BS VI emission norms. “I believe that first products compliant with these (BS VI) stringent norms would hit the market as early as 2018-19. They could either be exported first or launched in the local market. You learn from mistakes before achieving refinement in products,” he said.

Bajaj Auto has written to SIAM, the apex industry body, requesting it to specifically mention in any communication to the government that the two-wheeler OEM is not in favour of extending the April 1, 2017 deadline.

Not-so-Qute experience

“My biggest disdain is with the Qute experience. This remains to be the only puzzle that I have not been able to solve in my life. When we first thought of the quadricycles, we thought of adding superior and safer features to three-wheelers. We thought of adding a fourth wheel to three-wheelers, emission- compliant engine with water cooling and other features. Bajaj Auto is the largest three-wheeler maker in India. The quadricycle replacing the three-wheeler in the market is a loss for us. We are talking about it though. The Qute is being exported to several countries including Sri Lanka, Mexico and even Ethiopia. But somehow India remains to accept the quadricycle as a safer alternative to three-wheelers.”