Old Vehicles, Scrappage and Used Cars

How India's vehicle scrappage policy aims to remove old polluting vehicles, how the used car market works, and the economics of replacing vehicles.

Old vehicles pollute more and are less safe. But many owners keep them for years because replacing them is expensive.

The scrappage policy

India announced a vehicle scrappage policy in 2021. Key features:

Vehicles must pass fitness tests after a certain age, roughly 15 years for commercial vehicles and 20 years for private vehicles, for re-registration.
Registered scrapping facilities dismantle old vehicles and recycle materials.
Owners who scrap old vehicles get certificates that can bring discounts on new vehicles and road tax concessions.
Government-owned vehicles older than 15 years were to be scrapped.

Delhi’s rules

In Delhi, courts ordered that diesel vehicles older than 10 years and petrol vehicles older than 15 years couldn’t operate, making scrappage effectively compulsory there.

Used cars

India’s used car market is large and growing, with sales exceeding new car sales. Organised dealers and platforms like Cars24, Spinny and Maruti True Value offer inspections and warranties, reducing the “lemon” problem.

Economics

Scrappage supports new vehicle demand and recycling industries.
It cuts pollution and improves safety.
Owners of old vehicles, often poorer, may lose value. Incentives aim to compensate.

Recycling

Scrapping recovers steel, aluminium and other materials, reducing the need for new mining.

The old truck

A truck owner's 16-year-old vehicle fails its fitness test. He scraps it at a registered facility, receives a certificate, and gets a discount on a new, more efficient truck that also pollutes far less.

Thinking scrappage only benefits carmakers

It also cuts pollution, improves safety and supports recycling, though owners need fair incentives.

Key takeaways

India's 2021 scrappage policy requires fitness tests for old vehicles.
Scrapping certificates bring discounts on new vehicles.
The used car market is larger than the new car market.
Scrappage reduces pollution and recovers materials.