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India may turn to Bangladesh to clear BS IV stock

Jun 26 • Market Insights • 57 Views • No Comments on India may turn to Bangladesh to clear BS IV stock

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BS VI norms may drive the leading motorcycle manufacturer of India to export the existing stock of BS 4 two-wheelers to neighbouring countries.

BS VI emission norms, while a step in the right direction for dealing with India’s gravely serious pollution problem, has faced a lot of challenges for automakers in India.

While motorcycle manufacturers contend with the challenge of upgrading the high cost of upgrading their diesel engines, two-wheeler manufacturers also have some challenges to deal with.

To comply with BS VI, the leading motorcycle manufacturers had to hike their investments to upgrade existing models.

The number of product launches has declined in the past year.

Firms are looking at products that won’t need many changes before the new norms take effect.

Two- and four-wheeler makers have pulled capacity expansion plans, as they expect demand to fall.

Maruti Suzuki India Ltd and Hero MotoCorp Ltd have been impacted the most, given that their product portfolio is large compared to the competition.

Among other things, they have to deal with their massive inventories of BS IV models and word has it that Hero MotoCorp may have found a resolution — exports.

Reports claim that the largest two-wheeler manufacturer in India is contemplating exporting its existing stock of BS 4 two-wheelers to neighbouring countries, including Nepal, Sri Lanka, and Bangladesh, before BS VI norms kick in on 1 April 2020.

Now, more than 1,000 motorcycles are being sold daily. It was just half of the daily sales five years ago, according to data collected from industry insiders.

The motorcycle population has grown 17 times faster than the passenger cars, driven mainly by its rising demand.

Also, operators predict that the market would grow many folds in the next two-three years mostly because of the favourable policy and tariff structure that encourages assembling, leading to eventual manufacturing.

The BS IV stocks can reportedly be sold in the aforementioned countries with ease – a better option as compared to the prospect of the unsold stock in India eventually being scrapped.

The company is of the opinion that exporting vehicles will enable it to relieve its existing inventory in the domestic market.

Besides helping with the inventory, this strategy will allow Hero to improve exports revenue as the demand and sales in India continue to observe a slump.

Hero MotoCorp exported over 2x units in May as compared to its exports in April.

The company now intends to further increase exports from the current 3% to 10% over the next few years.

BS IV standards were implemented with the goal of ensuring that these vehicles will generally be no more polluting than BS VI four-wheeled gasoline passenger vehicles.

On 19 Feb 2016, the Ministry of Road Transport and Highways issued a draft notification of Bharat Stage (BS) VI emission standards.

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