New Delhi: As the government attempts to steer the automobile industry towards Bharat Stage VI (BS-VI) emission norms from April next year, Bajaj Auto has warned that the move could lead to dumping of BS-IV stock in the domestic market, triggering an "unwarranted price war" in the second half of the ongoing fiscal. In its annual report for 2018-19, the automaker compared the decision to switch to BS-VI emission norms to the "joker in the pack."
"For the industry as a whole, we believe that the joker in the pack will be the tough Bharat Stage VI, or BS VI, emission norms that will come into play from 1 April 2020," the report told Bajaj Auto's shareholders.
In the annual report, the Pune-based firm said that even though its motor-cycles and three-wheelers will be "fully compliant" with BS-VI norms before, April 1, 2020, it is difficult to say the same for the whole industry. "However, it is difficult to anticipate the state of BS VI readiness of our competitors. If some, or most, of them have a large stock of unsold BS-IV vehicles in the second half of FY2020, they will perforce have to dump these in the market before the advent of April 1, 2020," the report said.
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"That could trigger an unwarranted price war, to the detriment of all. We cannot claim that such a scenario will definitely play out; equally we cannot ignore a distinct risk overhang on that account," it added.
While noting that "days when a manufacturer could claim quasi-monopolistic presence in one or more segment is rapidly coming to an end," Bajaj Auto said that the domestic market will become more competitive across various segments.
It, however, assured its shareholders that armed with a surplus of over Rs 16,000 crore, "we at Bajaj Auto have the strength to deal with such competition." It added that a large part of the company's strength lies in its success in exports, where the markets are not only diverse but also less prone to acute competitive pressures as the domestic market.