A car can turn into a piece of junk after an accident or it can just age and emit harmful gases and pollute the environment. Such a car is declared as a scrap car by law. If your car is declared scrap, you are no longer authorized to drive it. So, the only option that you are left with is – to sell your car. Since a car consists of steel mostly, even after it is not able to run smoothly on the road, the body and the accessories are of great value which can eventually fetch a decent price for your car.
You must know all the laws and the legal documents you need to provide when you want to sell a scrap car and we have sorted them all for you. But first, you should know if your car is scrap or not based on the regulations of your state. A well-defined vehicle scrappage policy in India can help create an industry of its own with a business opportunity of $6 billion (Rs 43,000 crore) a year, say automobile sector executives and experts.
It could generate fresh employment and trigger economic growth, and also act as a critical factor to revive the automobile market that has been hit by a prolonged slowdown.
Why to Invest In Automated Vehicle Scrapping
In a time where various economies are entirely functioning on recycled auto scrap; India, the fastest growing economy in the world, has taken inordinately long to foray into the business. Not only is scrap generation from auto recycling a big- buck making industry, but it also comes with the added perk of being environment friendly by taking the old polluting vehicles off the roads. However, now, withstanding the odd-even rule, it has become apparent that India is consciously keen on making efforts to reduce air pollution and protect the environment. Road Transport and Highways Minister Nitin Gadkari in a recent media conference spoke of the need for a government policy for scrapping old vehicles, which are not only the greatest contributors to pollution but also a menace towards safety on the roads.
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Conventionally, vehicle scrap recycling in India has been a highly unorganized market where the end of life vehicles are unsafely stripped and scrap metals and all sorts of recovered & refurbished parts are sold. Currently, there are no regulations to monitor these markets and take account of the recovered scrap, thus necessitating a government policy that recognizes scrap generation from auto recycling as a sustainable, environment-friendly industry.
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Considering the need of the hour and the huge underlying potential of the industry, the Government of India under the Ministry of Road Transport & Highways is drafting a new scrapping policy or end of life policy, wherein rust bit, smoke coughing, dilapidated End of Life Vehicles aka ELVs, causing safety and environment hazards would soon find a way to be scrapped systematically. The policy will provide various incentives to owners of old vehicles instead of surrendering them for scrapping. This policy initiative is likely to open new avenues for auto recycling in India and promises benefits that would help strengthen the economy.
New Vehicle Scrappage Policy
- Under the new scheme, private vehicles older than 20 years and commercial vehicles older than 15 years will be eligible to be scrapped. The Finance Minister said the details of the scrappage scheme will be shared by the ministry soon.
- It is understood that both private vehicles and commercial vehicles over 20 and 15 years will have to undergo a fitness test at government-appointed automated vehicle fitness centers. Further to the announcement auto stocks of many manufacturers such as Mahindra and Mahindra, Maruti Suzuki and Tata Motors gained on the stock market.
- In-line with expectations from the industry, the Union government has announced the scrappage policy in the 2021-22 union budget. The government hopes the policy will look to phase out older, inefficient, and polluting vehicles and in turn promote the use of more environment-friendly vehicles. The scheme will apply to private vehicles above the age of 20 years and commercial vehicles above the age of 15 years.
- While the specifics of the policy are likely to follow in the days to come. We expect the policy to provide monetary incentives to owners of vehicles over the age of 15 years that are polluting and unfit to run, instead of their next vehicle purchase. It also is likely that these incentives will be available in the form of road tax rebates on the purchase of your next vehicle.
- According to a previous statement by the Ministry of Road Transport and Highways the policy is likely to be brought into effect from 1st April 2021. At the time Ministry of Road Transport and Highways had said that the new policy would invigorate the automotive sector, making India a vehicle manufacturing hub while reducing the price of vehicles on sale in India. Vehicles would undergo fitness tests in automated fitness centers after 20 years in the case of personal vehicles, and after 15 years in the case of commercial vehicles. On July 26, 2019, the government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur the adoption of electrical vehicles.
- The minister had also said that once the policy is approved, India will become an automobile hub and there will also be a reduction in the prices of automobiles. The minister had said that recycled material from old vehicles will help reduce the prices, adding that the automobile industry’s turnover, which is ₹5 lakh crore with ₹ 1.45 lakh crore exports, will get a boost. There are about 7 ministries involved in determining policies for auto-shredding in India, including Ministry of Steel; Ministry of Micro, Small and Medium Enterprises; Ministry of Heavy Industries & Public Enterprises, Ministry of Environment and Forests and others”
Global Market Overview of Vehicle Scrapping and Recycling Unit
The world’s largest and most evolved markets in auto-recycling are the US, Europe, and China. These nations have been dismantling old vehicles since as far back as the 1970s, as in the case of the US. It is well known that these are scrap-based markets and auto recycling is the reason why. Auto recycling in the US dates back to the 1970s; whereas, Europe and Japan began recycling in the 2000s, followed by China in 2012. The total market size of auto shredding in developed countries is approximately 30+ million cars, which generates about 27 million tons of scrap.
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Scope of Vehicle Recycling in India
India being the third-largest producer of steel in the world carries huge potential in auto-recycling. Being a thoroughly unorganized market, auto recycling in India can add numerous benefits to the nation’s kitty, beginning from a push to the automobile sector to savings in fuel and generating employment.
The recycling industry is betting heavily on this initiative by the government. At 25% (7 million cars) of total cars that could be scrapped initially, it is expected to generate business of around USD 2.9 billion (equivalent to ~INR 190 billion). These numbers are likely to grow over some time. On an average, a car weighs 1,400-1,600 kg. Upon recycling, it generates 65-70% steel scrap, 7-8% aluminum scrap, 1-1.5% copper scrap and 15-20% rubber and plastic scrap. At current scrap prices, a recycled car can fetch roughly INR 30,000-35,000 (USD 380-455). Assuming 20-25% of vehicles are scrapped in the first year, it has a potential of generating around 6 million tons (mnt) of scrap; ~150,000 mt copper scrap; ~0.8 mnt aluminum scrap, and ~1.8 mnt plastic and rubber scrap. Numbers are expected to grow in years to come.
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Automated Vehicles Market Overview In India
The auto component industry is likely to grow at 10-12 percent annually in the long term on rising rural income, higher disposable income, and continued infrastructure activity, according to a report. Although the Indian auto sector is facing growth challenges, it has the potential to grow at a CAGR of 5 percent through 2026. The new entrants will account for almost 15 percent of the market or a little over half a million units.
The arrival of small, cheaper, and more modern SUVs is boosting this segment, volumes of SUVs under 4 meters grew by 8 percent to 421,488 units. The mini hatch or entry segment has been witnessing a decline as consumers are looking at feature-equipped cars, bigger size premium hatchbacks and this has resulted in the decline of the mini hatch or entry segment.
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Conclusion
Niir project consultancy services (NPCS) provides the latest information on the present and the future industry trends of any business industry. The project report on “automated vehicle scrapping and recycling unit” allow the readers to identify the products and services, hence driving the revenue growth and profitability. The project report also shares details of production value with some important factors, upstream raw materials, and downstream demand that can lead to market growth.
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