[RavenAvi]

The Ministry of Road Transport and Highways has released it's concept paper regarding the Voluntary Vehicle Fleet Modernisation (V-VMP) policy - a program which has been made with the aim of taking off old polluting vehicles from the roads.

This policy will provide incentives to existing vehicle owners who bought their vehicles before March 2005 or are plying around in vehicles which are below BS-IV emission norms.

The concept note proposes cut in excise tax up to 50 per cent at the time of purchase of new car after scrapping old car, fair value for the scrap and discounts by automobile manufacturers. All these incentives is likely to reduce the cost of a new vehicle for a buyer by 12 per cent. It suggests complete excise exemption for state transport buses to encourage public transport and help decongest roads.

"The decision of excise exemption is to be taken by finance ministry. We'll try convincing them," a senior government official said.

"Voluntary Vehicle Fleet Modernisation (V-VMP) has the potential to reduce the vehicular emission by 25-30 per cent and saving oil consumption by 3.2 billion liters per year. The reducing in oil consumption by new vehicles will help save nearly Rs 7,000 crore in oil import," said the concept note on V-VMP floated by the ministry on Thursday.

According to the concept note, those opting for V-VMP will have to deposit documents relating to the vehicle at the recycling centre. After verification of documents, the owner will get a V-VMP certificate and will get the price for the scrap. Then he has to provide the certificate to the dealer while buying the new vehicle to avail discount.

ET

Link to the V-VMP Concept Paper

[RavenAvi]

The government's Voluntary Vehicle Fleet Modernisation Programme (V-VMP) policy is expected to generate over Rs 11,500 crores worth of steel scrap annually.

This will help immensely in reducing India’s import burden on steel and also improve the foreign-exchange reserves.

According to official estimates, over 28 million 10-year old polluting vehicles are currently plying on Indian roads.

“In addition to environmental and energy efficiency benefits, the V-VMP would be able to generate steel scrap worth Rs 11,500 crore domestically every year with the set-up of organised shredding centres of which 50 per cent would be generated by MHCVs (buses and trucks),” the government has said in its proposed policy.

Analysis of segment and age of vehicles causing air pollution has shown that MHCVs (Medium & Heavy Commercial Vehicles) constitute just 2.5 per cent of the total fleet but contribute to 60 per cent of pollution.

Besides, the older vehicles, typically more than 10 years of age and pre-BS I compliant, constitute 15 per cent of the total fleet but pollute 10-12 times more than a new vehicle because of drastic change in pollution norms, the government has said.

Financial Express

[swiftnfurious]

Originally Posted by RavenAvi

...This policy will provide incentives to existing vehicle owners who bought their vehicles before March 2005 or are plying around in vehicles which are below BS-IV emission norms...

Does this mean that someone who bought the same car after Mar 2015 wouldn't be eligible for the scheme? I have a 2002 Palio and it'll be completing 15 years in another 7 months. I bought the car in 2014, so am I not eligible for the scheme?

I hope the regulation is based on the age of the vehicle and not the year of ownership

Originally Posted by RavenAvi

The government's Voluntary Vehicle Fleet Modernisation Programme (V-VMP) policy is expected to generate over Rs 11,500 crores worth of steel scrap annually.

This will help immensely in reducing India’s import burden on steel and also improve the foreign-exchange reserves.

According to official estimates, over 28 million 10-year old polluting vehicles are currently plying on Indian roads...

Seems like the analysis & findings are in full throttle. Guess there are more advantages than just curbing pollution. I, as a consumer is quite happy with a possible 12% discount on a new vehicle.

[sgiitk]

I think given the negligible advantage in scrapping private vehicles (they did not need the expensive and extensive study for this) they are going to be least bothered about this segment. It may hurt us, but has near zero effect on 'the system'. So watch and wait.

[wanderernomad]

As is evident from the graphs and data, there is hardly any difference when it comes to private vehicles while the emission levels are significantly reduced when it comes to commercial vehicles. And yet all the couṛt verdicts are targeting private vehicles?
Am sure if the Government becomes proactive first and all State Transport and Government Buses and Trucks are replaced at say 5 and 10 year intervals, that alone would drop the emission levels significantly more than the entire private vehicles getting scrapped.

[RavenAvi]

The Government's planned V-VMP (Voluntary Vehicular Fleet Modernisation Policy) programme, which will reward incentives on new car buys to people who will voluntarily scrap their old polluting cars, might not extend to those who will be buying fuel-guzzlers!

Cars and UVs which have a fuel economy of less than 14 kmpl (as certified by ARAI) are most likely to be kept out of the V-VMP policy. Which could mean a large chunk of the SUV market & cars with bigger engine displacements could see exclusion from this programme.

The final decision on this particular condition will be taken after the Ministry holds discussions with the stakeholders and gets their feedback.

"Details of the plan are yet to be worked out. However, one thing is certain that the incentives won't be offered on fuel-guzzling cars. Otherwise, the motive of this policy would be defeated," the official said.

"Some minimum threshold of fuel efficiency would be worked out. It could be 13-14 km per litre."

The policy proposes three incentives for scrapping the old car half the regular excise duty at the time of purchase of the new car after scrapping old car, fair value for the scrap and discounts from automobile manufacturers.

These incentives are likely to reduce the cost of a new vehicle for a buyer on an average by 15 per cent.

ET

[avinash_clt]

Originally Posted by swiftnfurious

I hope the regulation is based on the age of the vehicle and not the year of ownership

Couldn't this lead to loopholes in the system? Eg: I plan to buy a Rs.50 lakh sedan. The excise duty on such a car would be significant. I could find an old cheap car with registration/fitness intact, scrap it and claim for 50% incentive in excise benefits. Although, in such a situation, only the govt stands to loose probable excise revenue. It is win-win for buyer as well as OEM.

It could be lucrative to buy some pre-2005 cheap cars and sell them at a premium to people who want to avail the above loophole.

Originally Posted by RavenAvi

[/b]Cars and UVs which have a fuel economy of less than 14 kmpl (as certified by ARAI) are most likely to be kept out of the V-VMP policy. Which could mean a large chunk of the SUV market & cars with bigger engine displacements could see exclusion from this programme.

If the objective is to reduce emission levels, this indeed makes sense.

[swiftnfurious]

Originally Posted by avinash_clt

Couldn't this lead to loopholes in the system? Eg: I plan to buy a Rs.50 lakh sedan. The excise duty on such a car would be significant. I could find an old cheap car with registration/fitness intact, scrap it and claim for 50% incentive in excise benefits. Although, in such a situation, only the govt stands to loose probable excise revenue. It is win-win for buyer as well as OEM...

They can always plug it by mandating a minimum ownership period like 2-3 years, before which they cant avail the benefit. Even a 1 year ownership period will deter people from buying an old car for a quick benefit.

[avinash_clt]

Originally Posted by swiftnfurious

They can always plug it by mandating a minimum ownership period like 2-3 years, before which they cant avail the benefit. Even a 1 year ownership period will deter people from buying an old car for a quick benefit.

Completely agree. A realistic minimum ownership period that will deter people from misusing the system.



I think the voluntary scrapping scheme would be welcomed by all stakeholders , if implemented properly. Except for few models, most of them won't hold residual value more than the discounts that could be availed during purchase of an equivalent new car. If one can't afford to buy a new vehicle, the proposal enables him/her to keep using it, unlike the blanket bans.

[Sebring]

I think this will have a cascading impact on the used cars scene. I was shocked to see 15-17 year old Zens quoting 1.5 lakhs in Bengaluru. Even Qualis was commanding good rates, along with Swift.

[Sherlocked]

Man, feeling weird thinking about scrapping my perfectly running car but if the cost saving is substantial I wouldn't mind doing so.
I see the higher segment car you buy after scrapping, the higher one will gain in terms of 50% reduction of excise duty

Any idea how much a 2004 WagonR Lx will get as a scrap amount?

[swiftnfurious]

Off-Topic:

Originally Posted by Sebring

I think this will have a cascading impact on the used cars scene. I was shocked to see 15-17 year old Zens quoting 1.5 lakhs in Bengaluru. Even Qualis was commanding good rates, along with Swift.

Both the cars you mention have a halo on them. They are / were quoted high re-sale value in Bangy always (down South particularly), and partly because Bangy is the most expensive city for buying a car due to the highest taxes in the country.

No, it's not due to the new ban, it's been always like that.

[commonman]

The system is talking about scrapping cars.The benefit is for the manufacturers than for the customer. Why they had not yet came out with the planning of swapping engines? Also,saw that SUV's will be put out of V-VMP scheme.So what are the owners supposed to do? Old Sierras and Safaris can run with a new heart. Why the paper is silent on that?

[IshaanIan]

Sorry I might have missed this earlier on in the thread. Is this mandatory? I mean what if I have an old vehicle but I do not want to scrap it because I believe it performs great even in the face of modern competition? I really hope not I mean give us a freaking break and let us drive whatever we want to!

[swiftnfurious]

Originally Posted by commonman

The system is talking about scrapping cars.The benefit is for the manufacturers than for the customer. Why they had not yet came out with the planning of swapping engines? Also,saw that SUV's will be put out of V-VMP scheme.So what are the owners supposed to do? Old Sierras and Safaris can run with a new heart. Why the paper is silent on that?

Too complicated to be performed. Who'll guarantee the reliability for such mods?

I think both manufacturer and owners are benefited. If I get a 12-15% discount on the vehicle, it's a good point, from a customer POV.

Originally Posted by IshaanIan

Sorry I might have missed this earlier on in the thread. Is this mandatory? I mean what if I have an old vehicle but I do not want to scrap it because I believe it performs great even in the face of modern competition? I really hope not I mean give us a freaking break and let us drive whatever we want to!

I don't think it's mandatory. The benefits are given to lure those who may be sitting on the fence.