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Old 19th May 2020, 14:56   #1
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Default Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

Maruti Suzuki writes off Rs 125 crore on obsolete BS-IV cars,

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the write-off is the result of the inventory lying with the company and its dealers.
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woes were compounded when the final 10 days of March were blocked because of the nation-wide lockdown.

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Last edited by volkman10 : 19th May 2020 at 14:59.
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Old 19th May 2020, 16:14   #2
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Default Re: BS6 / BSVI emission norms coming in April 2020!

That's around 2584 cars (calculated 4,83,657 as the average value per car for Maruti based on their 2019-20 figures).
125 crores amount to 2% of Maruti's profit for FY2019-20 (5650 cr.). In terms of volume, this is around 0.1% of the total number of cars sold by Maruti in FY2019-20 (15,63,297).

125 crores and ~2600 cars don't look a lot when compared with Maruti's overall sales value and volume but still is a significant number.

What will happen to these cars? I guess the chances of Maruti making them BSVI compliant are less as they are written off. I hope these are put to some use than getting scrapped.

It would be interesting to see these figures from other manufacturers.
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Old 19th May 2020, 16:34   #3
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Default Re: BS6 / BSVI emission norms coming in April 2020!

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What will happen to these cars? I guess the chances of Maruti making them BSVI compliant are less as they are written off. I hope these are put to some use than getting scrapped.
It's only the engine that fails to meet the norms. Rest of the car's parts are very much utile. Would they take these cars back to the factory and plonk the BS6 engine and make it hit the market again. Would that be ethical ?

I'm not for scrapping it. It's a waste of resources. One can make a guess on the number of man hours that had gone into making of each of those cars lying now as a dead duck.

Last edited by Bibendum90949 : 19th May 2020 at 16:41.
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Old 19th May 2020, 16:51   #4
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Default Re: BS6 / BSVI emission norms coming in April 2020!

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It's only the engine that fails to meet the norms. Rest of the car's parts are very much utile. Would they take these cars back to the factory and plonk the BS6 engine and make it hit the market again. Would that be ethical ?
I for one don't think that this would result in 100% loss of value. They should be able to 'Un-Build' the entire car and mark them towards spare parts inventory or warranty repairs for it to be reused. Even the BS4 Powertrains could be used as OEM replacements/spares. I'ts not like the existing BS4s on road are going away anytime soon, they at some point of time would require replacement parts anyway.
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Old 19th May 2020, 17:49   #5
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Default Re: BS6 / BSVI emission norms coming in April 2020!

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Originally Posted by haneeshN View Post
---

hat will happen to these cars? --
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Originally Posted by Bibendum90949 View Post
--

I'm not for scrapping it. It's a waste of resources. One can make a guess on the number of man hours that had gone into making of each of those cars lying now as a dead duck.
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Originally Posted by akash.1318 View Post
I f--They should be able to 'Un-Build' the entire car and mark them towards spare parts inventory or warranty repairs for it to be reused. ---
There is a possible way to sell these cars and most manufacturers will resort to them.

Fortunately, dealers have a rather unique option up their sleeve.

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If there are any unsold BS 4 stocks by end of March, dealers can convert them into pre-owned cars and sell them to new car buyers at BS 4 prices. BS 6 version of these vehicles could be available, too, but at a significantly higher price. The average jump in prices due to BS 6 is between 10 to 15 percent.
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Yes, the option of registering the vehicle in somebody's name is always there. It then becomes a used car and ready for resale. This is a completely legal practice and was done during the BS 3 to BS 4 transition as well. Discounts on such vehicles depends entirely on the stock the dealer has

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Old 19th May 2020, 18:37   #6
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Default Re: BS6 / BSVI emission norms coming in April 2020!

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Originally Posted by volkman10 View Post
There is a possible way to sell these cars and most manufacturers will resort to them.

Fortunately, dealers have a rather unique option up their sleeve.
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But then the news says " Maruti Suzuki writes off Rs 125 crore on obsolete BS-IV cars".

If it's a write off, how can dealers sell it as an used car ( by registering in their name and then selling it as almost new) to customers. Such a step would mean that the cars billed to the dealer has been encashed by the manufacturer. Then the books wouldn't tally if it's considered as write off ? I'm no financial expert but just a layman's thought. Please correct if I'm wrong.
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Old 19th May 2020, 19:44   #7
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Default Re: BS6 / BSVI emission norms coming in April 2020!

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Originally Posted by volkman10 View Post
Maruti Suzuki writes off Rs 125 crore on obsolete BS-IV cars,
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No where on the article does it say MSIL wrote off 125cr worth of obsolete cars. They say it was car parts worth that value. The article specifically says there were no unsold BSIV cars as per Maruti

Last edited by manson : 21st May 2020 at 12:15. Reason: Deleted black rows.
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Old 20th May 2020, 09:54   #8
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore - Posts moved to a new thread.
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Old 20th May 2020, 10:10   #9
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

I doubt MSIL would scrap all of these 2600 cars. It's only the engine that is non compliant - the best possible option would be to replace the engine with a BS6 engine. Second best option is to export these cars to a country where the pollution norms are not that stringent.

Last edited by moralfibre : 20th May 2020 at 10:28. Reason: Moved post from the Ducati thread to the right one.
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Old 20th May 2020, 10:11   #10
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

These will be some special parts that goes into the new cars and are only sparingly used as spares else they would have transferred internally to Spare sales.

By writing off, they can book loss and save on income tax. Not sure about GST reversal in such cases though as it’s an ongoing issue.

I can’t think of any particular part, maybe parts of exhaust systems as they don’t go bad?
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Old 21st May 2020, 09:47   #11
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

I don't think it's logically correct to say 125 crores means scrapping 2600 cars. It's an aggregation of money spent on BS4 parts, assembly line machines, ware housing, research and many other things related to BS4.
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Old 21st May 2020, 11:09   #12
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

While the write off here does not necessarily mean just cars (or none), I wonder how difficult/expensive is it for a manufacturer to convert a BS4 car to BS6? This might not be possible at dealer level but I strongly believe it should be easy job for a manufacturer.

Last edited by manson : 21st May 2020 at 12:13. Reason: Typos.
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Old 21st May 2020, 12:06   #13
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

Why didnt they just export the cars to somewhere like Nepal / Bangladesh / Africa, am sure their emission norms arent as strict. There must be something else.

Last edited by manson : 21st May 2020 at 12:14. Reason: Typos.
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Old 21st May 2020, 18:17   #14
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Default Re: Maruti Suzuki writes off BS4 inventory worth Rs. 125 crore

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Second best option is to export these cars to a country where the pollution norms are not that stringent.
If only Maruti had complied to the Build requisites of other countries as they sell canopies here in India.

Last edited by khan_sultan : 22nd May 2020 at 08:44. Reason: fixed quote
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Old 21st May 2020, 20:54   #15
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Originally Posted by kiranton View Post
I don't think it's logically correct to say 125 crores means scrapping 2600 cars. It's an aggregation of money spent on BS4 parts, assembly line machines, ware housing, research and many other things related to BS4.

I think this might be the right logic. The write off may not be 100% cars, rather it may be engine or related components that they have in excess inventory which they cannot use with BS6 cars. Not saying there may not be cars included in this write off, a good chance that there may be a decent number, and thats probably what Maruti would have earmarked to sell in Feb and March which would have got derailed due to COVID.
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