New Scrappage Policy in India’s Could Boost CV Sales

  • 2020-02-10 04:49:12
  • Reporter

The Indian government’s attempt to bring in a vehicle scrappage policy could lead to a rise in sales of commercial vehicles (CV), if implemented for vehicles older than 15 years. As it faces a bleak outlook in the near term, the country’s CV industry is awaiting a final scrappage policy from the Central government for a sustainable demand. A severe slump in demand has hit India’s CV segment over the past year. The medium and heavy CV segment has seen sales fall by over 40%, as a result of slow economic growth, tighter financing and overcapacity in the operators’ space. The industry expects some pre-buying to take place ahead of the implementation of the new BS-VI norms later this year, but the demand headwinds will be in place over the next few quarters Hence the anticipation of the government’s scrappage policy, which India’s CV industry hopes will stimulate sustainable demand while being eco-friendly and reducing the carbon footprint of these vehicles. The CV industry is keen that the government develops a strong policy for long-term goals, as opposed to making this a one-time occurrence. On Indian roads, there are about 120,000 CVs that are older than 15 years old. An effective scrappage policy could provide a big boost for the CV industry, with volumes coming in for replacement equivalent to 36% of annual sales (FY19), according to a report by ICICI Securities. Most other countries, such as the EU nations and the US, have introduced “Cash for Clunker’ scrappage policies, along with the implementation of stricter emissions norms. The CV industry pointed out that the draft scrappage policy covered mainly the building scrap centers and associated support mechanisms, and have urged the They urge the government to formulate the final policy covering all dimensions, including defining the end of life for vehicles based on km travelled, or mileage and years, as well as covering an incentive for scrap, and disincentive for keeping the old vehicle and the trading of scrapping certificates.

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