Home > Companies > News > Auto dealers find a way to bypass BS-IV

Mumbai/New Delhi: Several automobile dealerships across India have registered a large number of unsold Bharat Stage-IV (BS-IV) vehicles under proxy owners to sell them eventually in the pre-owned segment, said executives at several dealerships.

More two-wheeler dealers are resorting to this measure than car and commercial vehicle dealers due to the comparatively large number of unsold BS-IV scooters and motorcycles, the executives said.

The dealers were unable to clear their inventory before the Supreme Court’s deadline of 1 April because of the nationwide lockdown, they said. The dealers now plan to sell the pre-registered BS-IV vehicles in the open market once the lockdown is lifted and the markets recover, the dealers said, requesting anonymity. The vehicles are however, likely to fetch the dealers around 30% less than new models because of their pre-owned status and other costs, said the people Mint spoke to.

In October 2018, the Supreme Court ruled that no motor vehicle conforming to the BS-IV emission norms can be sold or registered in the country from 1 April. In March, the top court provided dealers relief by allowing them to sell 10% of the BS-IV stock after lockdown measures are lifted. However, industry executives said dealers are not leaving anything to chance even as they await clarity from the apex court on the duration of the grace period.

“Re-registration of new unused vehicles to sell them as used vehicles adds up to a significant cost burden on the dealers," said a Hyundai Motor India dealer based in Pune. “To re-register the vehicle, one has to pay the road tax again, which typically ranges from 8% to 21%. In Rajasthan, you have to pay a transfer fee to the tune of 25% of the road tax," said a Jaipur-based dealer.

A dealer will have to absorb a minimum cost of 1.3 lakh only to register a first-hand BS-IV Mahindra Bolero costing 8 lakh. Selling the same unused vehicle as pre-owned will involve payment of certain taxes twice.

“It is expected that a buyer of a pre-owned vehicle will bargain hard. To add to that, vehicle financing companies usually do not finance used vehicles as often as they do the new ones. Also, the interest payable for used vehicles is higher," said another dealer based in Vijayawada.

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