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Rediff.com  » Business » 1,000 drenched cars go for a song

1,000 drenched cars go for a song

August 12, 2005 10:46 IST

Over a thousand unregistered cars, lying at dealer stockyards in Bhiwandi and Taloja, were submerged in the floods that hit the city and its outskirts a fortnight back.

These cars -- a majority being Hyundai's Santro, Fiat's Palio and General Motors' Chevrolet -- will be repaired by dealers and then sold at a discount, says Mahendra Dhruva, national president, Surveyors' Association.

Most car dealers keep some stock outside Mumbai city limits to enable prospective customers buy cars without having to pay any octroi. The octroi charged for cars registered in Mumbai is 4.5 per cent of the value of a car.

Dealers will have to make a declaration to prospective buyers that these cars have been damaged in the floods and hence cannot be sold as brand new.

Discounts can run into Rs 100,000 and above depending on the model and the damage suffered. Car models in the stockyards at Vasai, a western suburb of Mumbai, were not much affected by the rains.

"Once the cars are delivered to dealers, auto manufacturers do not have any responsibility. Dealers do take a stock policy, which essentially is like a fire cover that protects their stocks in trade against floods among other disasters," says Dhruva.

Since the industry has taken a conscious decision not to declare cars affected by the floods as scrap, the stock policy taken by dealers will cover the repair cost of the cars.

Most automobile manufacturers, whose "unregistered" cars have been damaged in the floods, have advised their dealers to scrap the cars.

However, the dealers have decided to get the cars repaired instead to soften the blow of their losses.

Hyundai Plaza, one of the few dealerships in Bhiwandi belonging to the carmaker, is awaiting instructions from South Korea on what is to be done with the damaged cars.

"Till such a time these cars are sold, dealers cannot order fresh stock from manufacturers," says an industry executive. As each dealer tends to keep about 200 topline car models, the stock in trade affected by the floods can be worth Rs 8-10 crore (Rs 80-100 million), he adds.
Freny Patel in Mumbai
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