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The long-awaited and long-awaited vehicle scrapping policy may receive a boost in the near future with the Minister of Road and Highway Transport, Nitin Gadkari, who reported on Thursday that it will be of great benefit to the national automotive sector that is currently being developed. recovering from the effects of a national blockade to control the spread of Covid-19 disease.
The vehicle scrapping policy is currently awaiting approval from the Ministry of Finance and Gadkari, in a video conference with the Society of Indian Automobile Manufacturers (SIAM), said it is confident that all folds will be resolved quickly. “I have been trying to follow the scrapping policy for the past two years. We need the cooperation of other ministries, stakeholders. I have told the secretary to follow up as soon as possible. This is one of the steps to boost the industry.” . he said.
But what is the vehicle scrapping policy being touted as a massive step to help the Indian automotive sector?
In the simplest terms, the vehicle scrapping policy targets old polluting vehicles on Indian roads and seeks to limit them to junkyard. Since the resale value of vehicles beyond the age of 15 is extremely low, these vehicles can be sent to junkyards with some form of monetary compensation for owners, which could guarantee two benefits: an incentive for owners get rid of those vehicles and use these polluting vehicles to help. the environment. However, there could be other equally important benefits, such as these owners going to the new vehicle market that could increase demand and reuse waste materials such as steel and aluminum to make new vehicles.
End of life Vehicles are taken to scrap yards where machines such as crushers are used to reduce them to small parts, some of which are recycled. The challenge may be defining the established process and getting rid of the parts that cannot be used once more in an environmentally friendly way. And while there are also questions related to the amount of compensation to be awarded to owners who bring their vintage vehicles – how much, who will give, and what criteria will be followed, the obvious and multifaceted benefits of the policy itself are backed by the majority.
Cash for junkyards
Other countries have taken similar measures to the vehicle scrapping policy. In the USA In the USA, it was officially called the Auto Subsidy Reimbursement System, but it was popularly called ‘Junk Cash’. It was implemented after the 2008-2009 financial crisis with people who received around $ 4,500 for their vintage vehicles, as long as they buy a more fuel efficient vehicle instead. Fox News has reported that around 700,000 vehicles were brought to scrap yards under this program.
Did it help the auto industry?
It is not yet known if the Cash for Clunkers program really helped the American auto industry. Some studies in the USA USA They have shown that while compensation for vintage vehicles added a $ 3 billion burden to the US taxpayer. In the US, people who received compensation often went for cars that were smaller and / or less expensive. A study from Texas A&M University, for example, found that people who opted for Cash for Clunkers bought cars that cost $ 4,600 on average than cars they could have bought otherwise. Others, however, argue that the same people would not have made new purchases if it were not for the Cash for Clunkers program.
Several European countries have also attempted to experiment with similar programs and are also deliberating on it in today’s uncertain times. The German auto industry has been at the forefront of demand for the program, but Bloomberg reported earlier this week that the country had postponed the program until early June.
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