Scrapping your old car may fetch more soon

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₹10,000 crore and create 35,000 jobs, something that failed to materialize as owners chose to continue to sell old vehicles in rural areas instead. “The reason for the failure of this scheme is lack of incentives," said a government official, one of the two people cited above. "So, the plan is that both the government and automobile manufacturers offer incentives to the consumers—government incentives may come in the form of taxes, and auto manufacturers incentive could come in the form of discounts on the price of the vehicle," the official added.

Countries like the US, the UK, China, Canada and Germany offer a mix of incentives by the government and automakers to encourage scrapping. One of the most successful scrappage programmes in recent times was 'cash for clunkers' in the US, when financial incentives were offered to scrap old vehicles and purchase new ones, in an attempt to revive the ailing automobile industry. Under the 2021 policy, the scrap value for the old vehicle would be 4-6% of the ex-showroom price of a new vehicle, and authorized scrapping centres would provide owners with a scrapping certificate.

The road ministry had said it would promote setting up of automated fitness centres for commercial vehicles on a public-private partnership model. Several automakers had entered vehicle scrappage in recent years through tie-ups or their group companies. These include Tata Motors Rewire, Mahindra Cero and Maruti Suzuki Toyotsu.

However, consumer response has been tepid, and utilization levels at most of these centres have remained below 20%, an industry executive said on condition of anonymity. Vehicle owners see no benefit in scrapping given the limited financial benefit, the executive added. A second