Scrappage Policy: Commercial Vehicle Manufacturers Agree To Offer Discounts On New Purchase

The Union Transport Minister chaired a session of the delegation meeting of SIAM at Bharat Mandapam, during which several commercial vehicle manufacturers agreed to offer discounts for the purchase of new vehicles.

Key Highlights

• Union Transport Minister successfully held the delegation meeting of SIAM CEOs at Bharat Mandapam in which OEMs agreed to offer discounts on new vehicles against scrapping older ones.
• Commercial vehicle manufacturers are willing to offer discounts in a range from 1.5 to 3 percent for 2 years, depending on the kind of vehicle.
• A buyer against the traded certificate of deposit of a scrapped vehicle would receive a 2.75 percent discount on the ex-showroom price for scrapping a cargo vehicle with a gross vehicle weight of more than 3.5 tonnes.

After the successful delegation meeting of SIAM (Society of Indian Automobile Manufacturers) at Bharat Mandapam in New Delhi, Nitin Gadkari, Union Road Transport and Highways Minister, officially announced the discounts offered by many commercial vehicle manufacturers for the purchase of new vehicles in exchange for the scrapping of older or used vehicles with a valid certificate of deposit.

The Press Trust of India cited that the range of discount varies from 1.5 to 3 percent depending on the type of vehicle. It is up to OEMs (original equipment manufacturers) which can voluntarily provide extra discounts on specified commercial vehicle models.

Related Link: Tata Motors Inaugurates Fifth Registered Vehicle Scrapping Facility: Here’s Why It Is Unique

National Vehicle Scrappage Policy On Commercial Vehicles

To phase out outdated and environmentally harmful vehicles, India launched the National Vehicle Scrappage Policy in August 2021. States grant a 25 percent road tax rebate on vehicles bought after scrapping old vehicles. Under this policy, the commercial vehicle has a lifespan of 15 years and is subjected to a fitness test.

Heavy commercial vehicles (HCVs) will only be subject to fitness testing via ATSs (Automated Testing Stations) as of April 1, 2023. Starting on June 1, 2024, fitness testing for other categories of commercial vehicles and private vehicles will also be carried out via the ATS. A vehicle is classified as an ELV (End-of-Life Vehicle) if it fails the fitness test.

Scrappage Policy Offers New Discounts On Commercial Vehicles

Manufacturers of passenger and commercial vehicles met with the Union Minister for Road Transport and Highways. The minister pushed the industry to provide customers, who scrap their old vehicles, a discount on the purchase of a new one. It was later revealed that the OEMs approved of the minister's proposal during the meeting with the CEOs of the SIAM at Bharat Mandapam in New Delhi.

Manufacturers of commercial vehicles are prepared to provide discounts for a 2-year term. As per the statement, since the vehicle is not being exchanged but is simply being scrapped, only the scrappage discount will be applicable between exchange and scrap discount. The details of the scrapped trucks will be linked to the Vahan portal.

Commercial vehicle manufacturers like Tata Motors, Volvo Eicher Commercial Vehicles, Ashok Leyland, Mahindra & Mahindra, Force Motors, and SML Isuzu, will provide discounts of up to 3 percent on ex-showroom prices for those trucks that weigh more than 3.5 tonnes and 1.5 percent discount on ex-showroom prices for those models that carry gross vehicle weight less than 3.5 tonnes.

A discount of 2.75 percent of the ex-showroom price for scrapping a commercial cargo vehicle with a gross vehicle weight of more than 3.5 tonnes would be given to a buyer of a vehicle against the traded certificate of deposit of a scrapped commercial vehicle.

Official Statement By Union Road Transport Minister

Nitin Gadkari, Union Minister for Road Transport and Highways, tweeted, “I am pleased to report that, in response to my recommendation, several commercial and passenger vehicle manufacturers have agreed to offer discounts for the purchase of new vehicles against the scrapping of older vehicles with a valid certificate of deposit.”

He further expressed, “This initiative will significantly advance our circular economy efforts, ensuring that cleaner, safer, and more efficient vehicles are on our roads. Congratulations and gratitude to the automobile manufacturers who have taken the initiative to participate in our vehicle fleet modernization programme. I trust that others will soon follow their lead and join us in this important endeavour.”

Final Thought

The discounts on the purchase of new vehicles in exchange for scrapping an old one may incentivise the fleet owners to move for sustainable and affordable commercial vehicles for their logistical operations. This will help them to improve operational efficiency and it also protects the environment from the hazardous impact of using older vehicles on the road.

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