With the latest on-board diagnostic-II B system (OBD II-B) emission norms kicking in from April 1 for two-wheelers, wholesales in March are likely to drop because original equipment manufacturers (OEMs) will be clearing the older stocks during the month.
The impact is already seen in the last two months sales with leading companies such as Hero MotoCorp, Bajaj Auto, Honda Motorcycle & Scooter India (HMSI) and TVS Motor Company reporting a decline in sales.
For instance, Hero MotoCorp’s domestic wholesales (dispatches to dealers) have declined from 4,12,378 units in January to 3,57,296 in February (a decline of 13.35 per cent on month-on-month basis). Similarly, the largest scooter maker in the country, HMSI, has reported a decline of around five per cent month-on-month (M-o-M) to 3,83,918 units in February, as compared with 4,02,977 units in January this year.
Tamil Nadu-based TVS Motor Company also reported a decline of 6 per cent M-o-M in its wholesales to 2,67,502 units in February, as compared with 2,93,860 units in the previous month. ‘Pulsar’ maker Bajaj Auto reported a decline of around 15 per cent M-o-M in its wholesales to 1,46,138 units in February domestic sales from 1,71,299 units in January.
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OBD II-B emission
From April 1, all new two-wheelers manufactured in India are required to comply with OBD II-B emission standards that requires an OEM to put a monitoring system, which continuously monitors and reports on vehicle emission levels on a real time basis.
It is part of the BS-VI Stage-2 emission norms that mandates all new vehicles produced after March 31, should be equipped with OBD II-B technology to track emissions more effectively. The OBD II-A was implemented from April 2023.
This would also mean that the prices of the two-wheelers may again rise as OEMs would pass on the cost of installing the OBD monitoring system to the customers, experts tracking the industry said.
Compliant with new norms
Some companies like HMSI (Hornet 2.0), Suzuki Motorcycle India (V-Strom SX and the GIXXER Series) and TVS Motor Company (Jupiter 110) have already started rolling out vehicles compliant with the new norms.
“I think the retail will be better than the wholesales during this month. Once the OBD II-B comes, then only will we be able to see the exact impact because of the price increases. So, if it is truly an OBD factor, the wholesale numbers would be down this month. Let’s wait and watch…it could be a temporary product build problem (for meeting OBD norms),” Som Kapoor, Partner and Future of Mobility Leader, EY-Parthenon, told businessline.
He added that the real picture of demand trends will be clearer from April sales numbers, once the price increase phenomena is factored in.
“We don’t have the data yet (for February retail sales), but the general way of thinking is that the OEMs need to exhaust the existing stocks before the OBD II-B comes…So, probably production must be in control because OEMs need to correct the stocks as we can’t repeat the same mistake of keeping the stock at very high levels,” CS Vigneshwar, President, Federation of Automobile Dealers Associations (FADA), said.