{"id":111150,"date":"2021-04-02T09:15:30","date_gmt":"2021-04-02T09:15:30","guid":{"rendered":"https:\/\/fin2me.com\/?p=111150"},"modified":"2021-04-02T09:15:30","modified_gmt":"2021-04-02T09:15:30","slug":"vehicle-scrapping-policy-wont-benefit-car-makers-in-big-way","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/vehicle-scrapping-policy-wont-benefit-car-makers-in-big-way\/","title":{"rendered":"Vehicle scrapping policy won’t benefit car-makers in big way"},"content":{"rendered":"

‘I see a virtually zero impact on the sales of new vehicles with this move,’ said an expert.<\/strong><\/p>\n

<\/p>\n

The scrapping incentive policy, announced by the ministry of road transport and highways (MoRTH) recently, won’t have a meaningful impact on new vehicle sales, according to industry executives and transport experts.<\/p>\n

They said the actual number of vehicles available for scrapping is almost a fourth of government-estimated volumes.<\/p>\n

According to the MoRTH’s estimates, India has 5.1 million light motor vehicles which are 20-year-old or older; those above 15-year-old are estimated at 3.4 million.<\/p>\n

The ministry estimates the volume of M&HCVs (medium and heavy commercial vehicles) more than 15-year-old and without a valid fitness certificate to be 1.7 million.<\/p>\n

The number of vehicles — cars and commercial vehicles — that meet the age criteria for scrapping is almost a fourth what is being estimated, said S P Singh, senior fellow at Indian Foundation of Transport Research & Training (IFTRT). “The numbers are highly inflated,” he said.<\/p>\n

Given that it’s a voluntary policy, “manufacturers should not expect any bonanza out of it,” he said.<\/p>\n

Of four million commercial vehicles on Indian roads, half are M&HCVs.<\/p>\n

M&HCVs (16 tonne and above) that are older than 12 years anyways do not get the national permit, and tippers and tractors get discarded within 10 years.<\/p>\n

Therefore, manufacturers of these kinds of vehicles will hardly benefit from the policy, said a senior executive of a CV maker.<\/p>\n

“Contrary to the estimates, the actual number available for scrapping is far less,” he said.<\/p>\n

Kamal Bali, president and MD of Volvo India, on the other hand, argued the policy can have a multiplier effect upstream and downstream, if implemented effectively.<\/p>\n

He said customers can get a benefit of at least 15 per cent, provided a rebate in GST is given.<\/p>\n

His calculation also took into consideration the upcycle in commodities and customers getting good value at scrapping centres.<\/p>\n

“The condition of some of the end-of-life trucks is horrible in rural areas. A rebate of 5-6 per cent vehicle manufacturers will give; I expect a 2-3 per cent from a reduction in road tax from state governments, besides there is a potential chance of reduction in goods and services Tax plus there’s a value the customer will earn from scrapping centre. If incentives are to the tune of 15 per cent, the customer can make a down payment with that. So, I expect a good response,” Bali said.<\/p>\n

Mahantesh Sabarad, head of research at SBICAP Securities, said the receipt of a tradable certificate to the person who is scrapping his\/her vehicle is a good feature in the policy and should help people with limited means to discard their vehicle and purchase the best, which can be a pre-owned one, within their means.<\/p>\n

However, Sabarad doesn’t see the policy spurring demand for new vehicles. “I see a virtually zero impact on the sales of new vehicles with this move,” he said.<\/p>\n

Other analysts also do not see it boosting demand for new vehicles. “Given the timelines proposed and tad lower incentives than anticipated, we believe the benefits will be back-ended in nature,” wrote Shashank Kanodia, analyst at ICICI Direct.<\/p>\n

Feature Presentation: Rajesh Alva\/Rediff.com<\/em><\/strong><\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

‘I see a virtually zero impact on the sales of new vehicles with this move,’ said an expert. 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