Low discount may not drive old vehicles to scrap yard

The recent discount by automobile makers for vehicle scrapping may not be enough to lure customers.

- NITIN KUMAR

Automobile sector experts argue that consumers may find more value in continuing to drive their existing vehicles or selling them to third parties. This would make scrapping a less appealing option.

Commercial and passenger vehicle manufacturers recently introduced discounts in the range of 1.5-3.5 per cent of the ex-showroom price. This is on buying a new vehicle if the customer scraps the older one.

Sector experts believe that increasing the incentives to around 10 per cent would drive more meaningful behavioural change.

"The current incentive isn't sufficient to make consumers choose scrapping over selling or continuing to use their cars," said Puneet Gupta, director, S&P Global Mobility.

Gupta highlighted that many people hold onto their old vehicles primarily because they lack the funds for a new purchase.

SLOW UPTAKE

• Less than 45,000 private vehicles scrapped since implementation of vehicle scrapping policy in August 2022

• Automakers offering 1.5-3.5% discount on vehicle purchase if customers scrap their old vehicles

• Discounts insufficient to encourage customers to scrap their old vehicles, experts say

• Incentives need to be increased to around 10% to drive behaviour change, they argue