Why the Vehicle Scrappage Policy is unattractive
- The policy proposes to de-register vehicles that fail fitness tests or are unable to renew registrations after 15-20 years of use.
- Limited incentives and poor cost economics for trucks in the Vehicle Scrappage Policy, coupled with lack of addressable volumes for other segments is unlikely to drive freight transporters to replace their old vehicles with new ones, said a Crisil report.
- Though the scrappage volume of buses, PVs and two-wheelers is expected to be limited as well, the policy’s impact on new commercial vehicle (CV) sales could be sizeable, based on addressable volume, ratings agency Crisil Research said in its report.
- The potential benefit from scrapping a 15-year-old, entry-level small car will be ₹70,000, whereas its resale value is around ₹95,000. That makes scrapping unattractive, Crisil said in the report.
