We were amongst the first to start selling BS IV compliant machines immediately after implementation from Apr’21 as we were already ready with the new technology.
BS IV compliant engines are equipped with Electronic Control Unit (ECU) with which the customer can monitor the performance of his machine at various load and working conditions, analyse both spot and historic data, and get service reminders. We are using the very superior 4-valve engines based on the latest technology; they deliver much higher torque in optimum rpm range, high back-up torque, better fuel efficiencies, and higher service intervals.
We started selling our BS IV compliant machines from April’21 when the BS IV emission norms were made mandatory as we were already ready with the BS IV technology. We had also started educating our field team and our dealers on the new technology in the 3rd quarter of the last FY to create awareness of the benefits of the new machines.
We expect demand of BS IV compliant machines to rise to normal levels by Sept’21.
The cost increase of the new machines is 10-15% so there is bound to be an impact on their sales; this was however, anticipated, and we feel that the slowdown in sales will remain for a few months.
But looking at the pipeline of infrastructure projects and the strict timelines for their completion, there will be a demand for machines that promise higher productivity. So, we expect to see demand of BS IV compliant machines return to normal sales levels from Sept’21 onwards. We have witnessed the same pattern in the Commercial Vehicle Industry when new emission norms were introduced.
We offer various schemes to help customers upgrade to the new technology, which will enhance their productivity.
Our schemes like longer LTVs, Moratoriums, EMI relaxations, and Exchange options, will help customers upgrade to the new technology, enabling them to experience new, more advanced products, enhance their productivity, and become more environment conscious.
The sudden spike in sales of second-hand equipment will be temporary as the market will have to settle down on BS IV compliant equipment since no manufacturer will be able to produce or sell BS III machines now onwards.
The major buying segment in the wheeled equipment category are hirers, who either hire or rent out their equipment. These customers have been impacted by the low rentals and the low hiring rates prevailing in the market, which has major portion of BSIII equipment still running and serving the market. We anticipate that the impact of price hike will be for the short-term as hiring rates cannot remain at the same levels for long.
The price difference between backhoes and excavators will not have a major impact on sales as both the machines have different applications, with a very limited overlapping of operations in a few areas of work. Moreover, excavator prices will also get hiked due to the BS IV implementation which are likely to get implemented from FY’23-24.