NGT ban: Know how it will impact auto companies...

Zee Media Bureau

New Delhi:  Auto companies fear an immediate loss of 'hundreds of crores of rupees' due to ban on new diesel vehicles in the national capital.

The companies want the government to immediately clarify about registration and delivery of the vehicles for which the customers have already made part or full payments, even as they also stare at huge losses in form of the inventory they had lined up for year-end sales -- typically a period when industry doles out big discounts to clear the inventories.

The auto industry was jolted into this 'confused' state after the National Green Tribunal (NGT) on Friday ordered an immediate ban on registration of diesel-run vehicles in Delhi as also on renewal of registration of such vehicles which are more than 10 years old.

According to the industry estimates, the order has led to an immediate impact on 'thousands' of diesel vehicles, including high-end cars, that have already been booked by the customers in Delhi by making full or part payments and the process was underway to deliver those vehicles and get them registered.

The exact number of affected vehicles could not be ascertained immediately, while many more 'thousands' of diesel vehicles would also have to remain in godowns as the companies would not be able to sell the inventory they had lined up for year-end sales. Industry estimates suggest this would mean possible losses to the tune of hundreds of crores of rupees.

Most automakers effect price hikes in the month of January, due to which many customers tend to buy the vehicles in the year-end period when discounts are also available.

According to an auto sector analyst, around 1,400-1,500 vehicles are registered daily on an average in Delhi, out of which around 30 per cent are diesel-run. 

There are customers who have purchased vehicles, but registrations have not happened yet. What will happen to them. Those vehicles which are already in the showrooms in Delhi, what will happen to them.

Also, the challenge is on the inventory of diesel vehicles and the cost of it. It would adversely impact their viability as inventory levels are high in anticipation of high year-end sales.

While it is difficult to ascertain the exact number of vehicles in stock affected by the ban, according to industry players, most of the automobile manufacturers keep inventory of 4-6 weeks at their respective dealerships.

With Agency Inputs