Hero MotoCorp has announced that it will be offering support of about Rs 10,000 per motorcycle and Rs 15,000 per scooter to its dealers who sold some of their BS4 inventory to employees and associates through online channels before the BS6 norms came into effect. The urgency to get rid of stock before the deadline may have forced dealers to offer extremely low prices on the two-wheelers.
As per the provisions of the Supreme Court directive, those vehicles that have been sold (but not registered) before the March-end deadline would be allowed to register once the lockdown opens. This led to dealers with excess capacity of BS4 two-wheelers clearing stock by selling it to their staff, associates and relatives. These vehicles then could also possibly be sold off later as used/ second-hand vehicles.
Rating agency ICRA in a research note indicated that with the SC verdict not going their way, the automobile dealers are also now likely to return a few of unsold BS4 inventory to vehicle manufacturers (depending on each OEM’s policies).
The apex court had last month allowed 10 percent of BS4 inventory stock to be liquidated within 10 days after the lockdown restrictions are lifted. The court also allowed for permission to register already sold, yet unregistered, BS4 vehicles after the lockdown.
According to the Hero MotoCorp leadership, the company stopped BS4 manufacturing by mid-February. The brand’s retail growth clocked double digits in March (before the lockdown started) and was expecting to liquidate all its retail inventory by March 23-24. It claims that before the lockdown (March 22) the company was holding inventory close to 1.5 lakh vehicles at the retail level.
Hero MotoCorp, a company that holds 37.74 percent of the two-wheeler market share in India, would like to forget March and FY2020 sales numbers in a hurry. At 3,34,647 units, last month's sales are a sizable 42 percent down on year-ago figures (March 2019: 5,81,279). And considering that the industry slowdown has lasted for over a year and had an impact on commuter motorcycle sales, wherein Hero has a throttle hold, the FY2020 numbers are understandably low: 11 percent down, YoY, at 64,09,719 units (FY2019: 72,39,460).
Likewise, the company had reported a 19.27 percent decline in total sales at 4,98,242 units in February. In comparison, 6,17,215 units were sold in the same month last year.
As per a statement released by Hero MotoCorp, the company proactively suspended production at all its manufacturing facilities – including in India, Colombia, Bangladesh and the Global Parts Centre (GPC) at Neemrana, near Delhi, beginning March 22.
Azaman Chothia
Vishal Venugopal
