It is now common knowledge that the auto industry is in a massive slump. Demonetisation took the first punch, followed a dizzying flurry of body blows coming from the introduction of GST, new ABS regulations, exponential insurance rate hikes and greedy, short-sighted state-level taxation. Tottering on jelly legs, the industry is hitting record year-on-year sales drops and it now squints through bloodied, swollen eyes at the upcoming BS6 emissions deadline.
Most cost-effective two-wheelers that are fed by carburettors will now have to move to more expensive fuel-injection systems to comply. This, along with the additional catalyst material required, is expected to drive costs up by 10 to 15 percent. In theory, bigger bikes that are already fuel injected won’t be subject to price hikes of such high percentage – but there is another problem that isn’t so apparent at the moment.
India tends to base its emission standards on the Euro ones – it’s much easier to adopt someone else’s meticulously formulated set of regulations than to create your own. BS4 was based on Euro 4 and the upcoming BS6 regulations will be more or less the same as the imminent Euro 5 motorcycle standards. The problem is that the Indian government has decided not to follow the Euro 5 timeframe.
In Europe, the deadline for the conversion to Euro 5 regulations is January 1, 2020, but this only applies to new models that are launched after the date. Existing motorcycles will have another year’s time to catch up, whereas, in India, every two-wheeler sold from April 1, 2020, must comply.
This is an extremely difficult situation for the big bike players in our market. In Europe, they don’t find themselves in a mad rush to make the technically challenging upgrade to Euro 5. Every premium motorcycle brand representative I speak with in India says they are fervently working on it, but the worry is that our sales numbers simply aren’t significant enough to throw these manufacturers into working overtime to meet the deadline.
That’s not to say no one will have bikes ready, but it’s almost certain that many models across multiple brands won’t be updated for sale in time, and possibly for a few months after the deadline. Hopefully, the showrooms won’t be too empty, because even though the sinking sales of Activas, Splendors and Royal Enfields are hogging the headlines, big-bike numbers have taken a free dive in the last two years as well. It’s going to be even more of a challenge to keep a dealership running when there simply aren’t enough bikes to sell.
The tough times are already here, but the two-wheeler industry is about to see things get even worse before they get better.