Tata Motors is looking to export nearly half of its unsold inventory of commercial vehicles following a ban on registrations of Bharat Stage III models in India.

IHS Markit Perspective:

• Significance: Tata Motors has launched buses equipped with automated manual transmission (AMT) technology. The automaker also plans to export some of its commercial vehicles equipped with old emission technology in the wake of the ban on Bharat Stage III models in India.
• Implications:The introduction of AMT technology in buses is a positive move by the automaker and is likely to receive support from fleet buyers.
• Outlook:Tata is still contemplating whether legal action is possible against the Supreme Court order to ban registrations of Bharat Stage III vehicles, but it appears that the options for the industry are limited.

Tata Motors has launched buses equipped with automated manual transmission (AMT) technology. The semi-automatic transmission technology is being offered in the automaker's Starbus and Ultra brand of buses ranging from 9 to 12 metres long. The Bharat Stage IV (BS IV)-compliant buses, offered in multiple variants for diverse applications, are priced at INR2.1 million (USD32,430) and above. The buses have a seating capacity of 23 to 54 passengers and the usage of semi-automatic transmission is claimed to deliver fuel savings of up to 3%. The AMT technology in the buses is supplied by WABCO, which is also working with other OEMs.

"As the cities get congested, especially during peak hours, the average speed of the vehicle is drastically reduced with frequent start stop, causing delays, discomfort for passengers and drivers and more so cuts down on the fuel economy of the vehicle. The new AMT buses from Tata Motors will address these issues, also bringing down the TCO [total cost of ownership]," said Dr Ajit Kumar Jindal, Tata Motors' head of engineering, commercial vehicles.

Plans to export BS III CVs

The automaker also plans to export some of its commercial vehicles (CVs) equipped with old emission technology. A Reuters report quotes a senior company executive as saying that Tata has unsold inventory of nearly 15,000 BS III CVs, while another 3,000 units are with dealers. "Over half the stock is exportable over 4 to 6 months with minimal or no change," said Ravindra Pisharody, Tata's executive director for CVs. The executive added that the Indian automotive industry is still contemplating whether legal action is possible against the Supreme Court's order banning registrations of BS III vehicles after 31 March 2017.

"Of the balance [unsold inventory] we are looking at converting them [to Euro IV technology] ... and cannibalising the remaining for spare parts," added the executive.

Outlook and implications

The introduction of AMT technology in buses by Tata Motors points to the growing popularity of this convenience feature. Although the basic architecture of the transmission remains similar to manual transmission, AMT technology uses actuators to eliminate manual shifting of the clutch. As gear changes are made at the most appropriate time, fuel efficiency is on the higher side in AMT vehicles as opposed to manual transmission siblings. This results in significant savings in operating costs, making the option appealing to fleet operators. At the same time, the semi-automatic transmission comes at a smaller premium than fully automatic transmissions. Apart from Tata Motors, other automakers are also experimenting with the technology. Tata is among the leading manufacturers of buses in India and obtains a sizeable number of orders from state transport undertakings (STUs), which may turn out to be ready buyers of this technology.

Meanwhile, Pisharody's comments indicate that the industry is still keeping all options open regarding the unsold inventory of BS III vehicles. This is quite understandable as automakers will take several months to clear this inventory. In 2014, the Indian government announced a nationwide rollout of BS IV emission norms for all vehicles with effect from 1 April 2017. Although the directive prohibited production of BS III vehicles starting from 1 April, it did not clearly state what should be done with unsold inventory of BS III vehicles. As a result, several automakers expressed disappointment at the recent court verdict. Calling the judgment a "penalty", Tata said the industry had planned the transition to BS IV in line with the past practice of stopping production of non-compliant vehicles from the transition date. Although the industry remains hopeful of gaining respite through legal recourse, it appears that the options for automakers are limited as the judgment came from the country's apex court.

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The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.