The vehicle scrappage policy has received a lukewarm response so far, even as the scheme is yet to be rolled out pan India.
According to automobile dealers, Rajasthan boasts the highest number of vehicles, with 40,000 customers subscribed for scrappage while Karnataka has nearly 3,000 subscribers.
Incentive boost
“The State government of Rajasthan has offered additional discounts on vehicle scrappage, with an add-on from the union government’s scrappage policy. This has led to a surge in people turning their vehicles for scrapping. There has been a significant uptick as Original Equipment Manufacturers (OEMs) are offering good discounts,” said an automobile dealer from Rajasthan.
Apart from Rajasthan, Karnataka has also announced discounts on old vehicles being scrapped. The Delhi government has likewise notified incentives on old vehicle scrapping.
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“The policy has just come into force and has not been implemented across the country. We are seeing promising response but are waiting for State governments to begin action,” said CS Vigneshwar, President of the Federation of Automobile Dealers Association (FADA) to businessline.
Transport Minister Nitin Gadkari, during a meeting with Original Equipment Manufacturers, announced that companies will offer discounts on scrappage. Consumers could get up to 4 to 6 per cent discounts on their old vehicles. Indian automakers have agreed to offer discounts on vehicles.
Space constraints
However, according to industry leaders, the lack of space for scrapping is the primary reason for the low turnout of vehicle scrapping.
“In cities, the availability of space and suitable locations for vehicle scrapping is limited, which has impacted scrapping efforts across the country,” said an industry leader.
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Industry experts believe that with incentives from the State government, consumers will be encouraged to come forward.
“We believe the impact of vehicle scrappage has more to do with the incentive that the customer is getting. The incentive is not lucrative enough for the customer to scrap his old vehicle,” said Hemal Thakkar, Senior Practice Leader and Director of consulting, at CRISIL Market Intelligence and Analytics.