Auto shares drop as Supreme Court bans sale of BS-III vehicles; Hero falls 4%
This comes as a major blow to many automobile manufacturers who have a large unsold inventory of BS III vehicles.
Shares of automobile companies plunged during late trading on Wednesday after Supreme Court banned the sale of Bharat Stage (BS) III vehicles from April 1.
The apex court passed the judgment that vehicles not compliant with BS IV norms will not be sold from April 1.
ALSO READ: Supreme Court bans sales of BS III vehicles from April 1
S&P BSE Auto sector was the top loser as it was trading down at 21842.69, down 186.89 points or 0.85%. While, BSE Sensex was trading at 29,483.48, up 73.96 points or 0.25% and NSE Siftty was trading at 9,126.35, up 25.55 points or 0.28%.
Among listed Auto cos, Hero MotoCorp (-3.67%), Ashok Leyland (-2.66%), Eicher Motors (-1.08%), Bharat Forge (-1.13%), Tata Motors (-0.95%), Maruti Suzuki (-0.65%) and Mahindra & Mahindra (-0.61%).
This comes as a major blow to many automobile manufacturers who have a large unsold inventory of BS III vehicles.
The reason for the auto cos to express their displeasure is the cost of changing to the new technology.
ALSO READ: Govt asks Supreme Court to allow BS III vehicles sales post April 1
As reported by Zeebiz earlier, this will result in rise in costs of their vehicles in comparison to BS III vehicles. For instance, Bajaj Auto vehicles rose between Rs 1,000 to Rs 7,000. A reason for Bajaj to voice disapproval as any extension of the deadline by the government would lead to its competitors with BS-III models benefiting from the price advantage in the market.
However, two-wheeler major Hero MotoCorp's lawyer on Tuesday told the court that the company will lose Rs 1,600 crore post SC's decision.
According to SIAM figures submitted to the apex court, two-wheelers have the highest inventory of BS III vehicles of over 6 lakh vehicles, followed by 96,000 commercial vehicles and around 40,000 three-wheelers.
ALSO READ: Ambiguity over BS-IV norms implementation may hurt pre-sales of automobile firms
Tata Motors, Honda, Yamaha and dealers’ body have all been opposed to the ban on sale of BS III vehicles post-March.
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