Vehicle scrapping policy win-win for automakers, govt: Nitin Gadkari

Union minister of road transport and highways Nitin Gadkari says he needs the auto industry’s cooperation to promote the government’s vehicle scrapping policy.

In Europe and the U.S., auto sales increase by at least 10% because of vehicle scrapping, Gadkari says at the Society of Indian Automobile Manufacturers’s (SIAM’s) 64th Annual Convention.

“Due to scrapping, Germany has increased its sales by 10% and the U.S. by 15%,” he says.

India has 3 crore end-of-life vehicles, the Union minister says.

For vehicle scrapping centres and fitness centres, the government needs the industry’s cooperation, says Gadkari. “It is an economically viable venture which is going to bring more profits to companies because by scrapping component costs will reduce by 30-40%,” he says.

Auto players should establish their own scrapping and fitness centres, the minister says.

According to Gadkari, raw material recovery is 90% due to vehicle scrapping and steel imports can be reduced by 65 lakh tonnes.

Currently, there are 63 operational scrapping centres in India while 60 are under construction and 40 in pipeline.

“We need more vehicle scrapping centres. It is a win-win situation for both auto manufacturers and the government as this will create more jobs,” says Gadkari.

This comes weeks after vehicle manufacturers agreed to offer discounts on purchase of new automobiles if buyers show a scrappage certificate for a limited period. Commercial vehicle and passenger car manufacturers have shown a willingness to offer discounts for a limited period of two years and one year respectively.

These discounts will further incentivise scrapping of end-of-life vehicles, thereby ensuring plying of safer, cleaner and efficient vehicles on the roads. Passenger vehicle manufacturers such as Maruti Suzuki India Ltd, Tata Motors, Mahindra & Mahindra, Hyundai Motor India, Kia Motors, Toyota Kirloskar Motor, Honda Cars,  JSW MG Motor, Renault India, Nissan India and Skoda Volkswagen India are offering discounts of 1.5% of the ex-showroom price of new car or ₹20,000, whichever is less, against the passenger vehicle scrapped by the owner in the last six months. Mercedes Benz India has offered a flat discount of ₹25,000, which will be over and above all existing discounts.

The ministry has launched the voluntary vehicle modernisation programme or vehicle scrapping policy to create an ecosystem for phasing out unfit polluting vehicles across the country. Buyers can get their old vehicles scrapped through a network of registered vehicle scrapping facilities.

Discounts by original equipment manufacturers (OEM) are in addition to the scrap value provided by registered vehicle scrapping facilities to the vehicle owners and existing incentives of motor vehicle tax concession, waiver of fee for issuance of certificate of registration and waiver of liabilities by Government of India under the vehicle scrapping policy linked to the certificate of deposit on purchase of a new vehicle.

Commercial vehicle makers namely Tata Motors, Volvo Eicher Commercial Vehicles, Ashok Leyland, Mahindra & Mahindra, Force Motors, Isuzu Motors and SML Isuzu are offering discount equivalent to 3% of the ex-showroom price for a commercial cargo vehicle with more than 3.5 tonnes gross vehicle weight (GVW) scrapped by the owner within last six months and a discount equivalent to 1.5% of the ex-showroom price for a commercial cargo vehicle with less than 3.5 tonnes GVW scrapped by the owner within last six months.