[PVPal]

The Economic Times Mumbai Edition printed an article titled "Making a case for junking old vehicles" (Link here).

While there are a couple of good suggestions of giving incentives to owners of old vehicles in terms of rebates on excise duty, contrary to its title, the article fails to build the case. In general, the following points, which one would expect to see in the arguments, are missing:

1. The article seems to make its case solely on the basis of age of the vehicle, and fails to mention why such an assumption is valid.
2. Tying the age of the vehicle to its pollution, at least bracketing the maximum and minimum emissions is missing. Consequently, it is not clear how much the vehicle pollutes beyond the acceptable limit, if at all, depending on its age.
3. How many such vehicles are plying the roads? Consequently, the dimension of the business case to set up scrapping plants, and the extractable metals out of such vehicles, are not clear.
4. The article mentions future expected growth rates of the vehicle market, and compares it to the rest of the world. What is missing is at what rate are the vehicles already plying the road going to come under the scraping category, for instance, only based on the age criteria.
5. The article mentions SIAM's recommendation to the GOI on giving incentives to scrapping old vehicles, but does not mention the criteria that SIAM has suggested to deem a vehicle under scrap category.
6. Also, the article does not question why the government should pay to scrap the vehicle, and not the manufacturers who will benefit from a scrapping economy in terms of new sales, as well as readily available metals/raw-materials. This is especially so since according to Mr. Gokarn, chief of the National Automotive Testing and R&D Infrastructure Project who is quoted in the article "we import high quality steel, copper, for automobiles, but when we re-cycle, we can use them for re-manufacturing".
7. The article mentions other countries having a vehicle scrapping economy, but fails to give any concrete numbers (dimensions) to such an economy, its benefits and its downsides.

While there is a definite case of scrapping polluting vehicles in India, especially some commercial vehicles, it is not clear if any of the relevant agencies have a quantitative roadmap which includes the definition of such vehicles, the magnitude of the impact if they are removed from the roads both in terms of emissions and economy, the dimensions of the scrap market and its business case, and ways to indeed promote such a market, if justified.

[GTO]

Thread moved from the Assembly Line to the Indian Car Scene. Thanks for sharing!

[gomzi]

I also read that article and while the writer seems to have consulted various sources, its devoid of the why part of the argument. Also quoting the cash for clunkers program, does our government have the wherewithal to implement such a scheme?

In a scenario where people think 'if it isn't broken why change it' as evidenced by age-old vehicles on two and four wheels, its going to be really tough to convince them to change.

We don't need more rules, only proper implementation of existing rules. Enforcement of PUC cards issued by legitimate authorized outlets by rto's and police will be more effective to weed out the truly polluting vehicles.

[AshBabu]

There need to be some consensus built on polluting vehicle. It is true it cannot be based on years but some line need to be drawn. There is need for protecting the environment. But need to protect people interest also is important.

Government can consider different pollution level compliances based on age of vehicles. This should be defined for all type vehicles - commercial and private. This can be a good start. Implementation part will be a challenge in our country where money and power can always buy protection.

Not sure how far it will be feasible to implement monetary incentives. But it can help in the long run. Also dismantling cars and commercial vehicles can be a good business opportunity. Entrepreneurs can be encouraged to set up such type of industry across the country. But all this might require clear strategy and well defined procedures to succeed. Can this happen in India? May be too much of expectation.

[GTO]

This will never see the light of day. For one, 25K is too small an incentive. Then, there will be a big hue & cry over a 25K incentive for old -> new car upgrades in our country, where there are most pressing matters to send funds to.

Labour is cheap, parts are easy to source and jugaad is aplenty. That's why we see so many vehicles running beyond their expiry date on our roads. We shouldn't blindly look at the west for inspiration. Ours is a very unique country & market.

[SmartCat]

The Western "Cash For Clunkers" program was introduced NOT to save the environment or to introduce safer, high fuel economy vehicles on the roads. It was introduced in 2009 (after the great 2008 Recession) to save the automobile industry (Ford, GM etc) from financial ruin.

[latentpotential]

Why not have a slab based system for reliability & pollution checks? e.g a car made between 1960-1975 has different passing criteria that it will need to go through every 5 years than a car made between 1975-1985? and so on. This will allow people to use old vehicles maintained decently.

[zenren]

Originally Posted by latentpotential

Why not have a slab based system for reliability & pollution checks? e.g a car made between 1960-1975 has different passing criteria that it will need to go through every 5 years than a car made between 1975-1985? and so on. This will allow people to use old vehicles maintained decently.

Slab based system totally defeats the purpose of this rule, which is to get the highly polluting vehicles off the roads, especially the ones that are daily runners. Someone not having enough money to buy a new car is no reason to pollute the air quality in Delhi which is already the worst across the globe.

I do agree that the 15-year rule is probably unfair in case there is a 15+ year old vehicle that is less polluting than a new car. However, that would be a very rare exception and not the norm, since almost all of the pre-2000 vehicles couldn't meet Euro-2 norms even when they were brand new - so it is unlikely to meet the norms now irrespective of how well they were maintained. There should be no relaxations in the norms for these vehicles to keep them on the roads, if it is polluting more than what a new car does which is BS-4 emission norms. Considering the health of all the residents of a city is at stake, there should be no compromise on this because a few people would be impacted.

However, the government should give some tax concession on the purchase of a new car for those who scrap off their 15+ year old vehicles, since this is done in the interest of the public good. If military canteens can allow duty-free cars for defense personnel, the same courtesy should be extended to those individuals who are put at an inconvenience considering the best interest of the general public health.

The only collateral damage I see here is that the vintage and classic cars are also going to come under the purview of this, but it should be addressed separately. For example, taking these vehicles out of Delhi to farm houses or hometowns/villages where they can be stored and maintained legally or getting them assigned some different series of registration that comes at a high premium and makes it a deterrent for someone looking at financial viability by keeping these cars instead of buying a new car.

[PVPal]

I too think that this will not see the light of the day. But what is striking is that at least the people who appear to be involved in the process, and those who appear to want it to happen, do not have as simple a technical detail as what should stay on the road and what not.

If its age of the vehicle, one would expect arguments on vehicles not complying to BS II, III or IV.

If the argument is pollution irrespective of the age of the vehicle, the argument would be on stricter norms and proper implementation of PUC.

Instead, there is discussion on the government paying, and certainly not the manufacturers, for scrapping the old cars.

Also, the discussion is on an apparent scrapping market, without any basic numbers.

It makes one wonder who is driving the discussion without any technical or economic basis, but definitely asking for tax payer money to fund the program.

[MHG]

Call me elitist, but as an engineer I hate it when these non-tech management type folks with no clue about how things work start calling all the shots.

Yes, there are plenty of old vehicles that pollute. But a blanket ban on vehicles older than X years is just stupid. Are they assuming that a vehicle older than 15 years will automatically be unable to meet emission norms of today, as if by magic ? And are they assuming that 5 year old vehicles that haven't been kept properly will pass emission norms for sure ? The same goes to using engine displacement for taxation.

There are plenty of better ways to solve this problem - use tail pipe emission test at the start of every financial year (or two) and use it to tax the vehicle for the next year. Regardless of power, displacement, number of seats, etc. Equal pollution equal tax.

Something tells me there are forces behind this law from the automotive manufacturers lobby as well - it would reduce demand for used vehicles and increase sales of new vehicles. This is planned obsolescence, just like with phones and tablets. I wish we can see the early decades of 20th century luxury automobile engineering again - vehicles that were actually over engineered and proudly sold with lifetime warranties.

[jfxavier]

How about a nice hefty discount for srapping that old car you always wanted to get rid of??
It might be possible soon.
Similar schemes have been rolled out by various governments around the world to vitalize the car industry.

Source: http://www.thehindu.com/business/Ind...?homepage=true

The Centre is considering giving financial incentives to those willing to discard their old cars under a new policy, Transport Minister Nitin Gadkari said on Friday as he urged people to avoid using multiple cars and adopt ‘vehicle planning’ on the lines of ‘family planning.’

Mr. Gadkari, also the Minister for Roads and Highways, said the new policy was aimed at encouraging people to discard their old cars and purchase the new ones, which also benefits the government in form of tax revenue.

“We are formulating a new policy that whoever will surrender the old car we will give some incentive to them. We will process the old cars in any industrial area and recycle their parts. We will give some money to them. On one new vehicle purchase, the government is benefited by Rs.95,000. We will encourage people to sell off their old cars,” he said.

[.anshuman]

So instead of providing cash benefits for scrapping of a old car, government should provide concession on Road tax for new car if the owners scraps his old car, similar to exchange offers run by car companies. This will ensure the old polluting car will be off the road, and new car confirming to latest emission & FE norms replaces it, also there will be no extra burden on road/parking spaces.

[Jeroen]

A while ago they ran the so called "cash for clunkers" program in the states.
It was very successful.

https://en.wikipedia.org/wiki/Car_Al..._Rebate_System

In essence you would be eligible if your trade-in vehicle had a fuel economy rating of 17 mpg or less and it offered a three-tiered voucher system ranging from $2,500 for a new car that is 7 mpg more efficient than a trade-in to $4,500 for one that is 13 mpg more efficient.

Your trade in would get destroyed. The dealers had to destroy the engine. Go to youtube and search for "cash for clunkers" and you will find a lot of these video's

https://www.youtube.com/watch?v=ds94ZMOb4CE

So all in all most people felt it was a very successful program. The one thing I did not like about it, was the fact that this program destroyed a lot of early Jeep Cherokees. Love that car. Well, at least it provided parts in great abundance in the scrap yards.

Jeroen

[LionX]

Originally Posted by .anshuman

So instead of providing cash benefits for scrapping of a old car, government should provide concession on Road tax for new car if the owners scraps his old car, similar to exchange offers run by car companies.

May be Govt can provide exemptions for tax paying individuals on new vehicle. Instead of LTA, salaried individual should be able to get tax exemption for auto loans. Say a maximum of 50 k on principle & 50 K on loan interest.Just like the home loans. This will equally help the automotive & banking sector.

[varunanb]

This is good news. Along with cars, trucks also need to be included. Omitted busses as most of the busses are govt. owned.

Majority of trucks running in our roads are atleast 10 years old and resulting in lots of accidents and Jams across country and they are probably 2 or 3 generations back in technology. In all probability, this might inturn revive our economy to a greater extent. Should be a win win if implemented.