In a significant development, automakers have agreed to offer discounts of 1.5 to 3 per cent, or up to ₹25,000, to customers who purchase a new vehicle after scrapping the old vehicles. The announcement came after a meeting between automakers and Minister of Road Transport and Highways, Nitin Gadkari, on Tuesday.

Gadkari has been advocating for discounts to new customers who come after scrapping of their old cars. However, vehicle manufacturers were not on the same page.

“I am pleased to report that, in response to my recommendation, several commercial and passenger vehicle manufacturers have agreed to offer discounts for the purchase of new vehicles against the scrapping of older vehicles with a valid Certificate of Deposit,” Gadkari said in a post on X after meeting top officials of several companies.

Push for recycled cars

Companies including Mercedes-Benz had already announced last month that it will offer a standard discount of ₹25,000 to customers who purchase their cars after scrapping their old vehicles.

“State governments have taken a big (interest) in recycle/scrappage. There are many States which are offering 25 - 30 per cent rebate on road tax for recycled cars. From Mercedes-Benz India, we have announced that we will support with an additional ₹25,000 for any customer who has recycled theie older car. So actually, he can get a seven-eight per cent (effectively) advantage on the on-Road price of a car,” Santosh Iyer, Managing Director and CEO, Mercedes-Benz India had told businessline.

Gadkari also said that such an initiative will significantly advance the government’s Circular Economy efforts, ensuring that cleaner, safer, and more efficient vehicles are on our roads.

“Congratulations and gratitude to the automobile manufacturers who have taken the initiative to participate in our Vehicle Fleet Modernisation Programme. I trust that others will soon follow their lead and join us in this important endeavour,” Gadkari added.

Scrappage terms

A statement later by the Ministry of Road Transport and Highways (MoRTH) said that commercial vehicle (CV) and multiple passenger vehicle (PV) manufacturers have agreed to offer discounts for a limited period against a Certificate of Deposit (Scrappage Certificate). While the CV manufacturers are willing to offer discounts for a limited period of two years, PV manufacturers are willing to offer discounts for a limited period of one year.

However, it may be further noted that PV manufacturers, including Maruti Suzuki India, Tata Motors, Mahindra & Mahindra, Hyundai Motor India, Kia Motors, Toyota Kirloskar Motor, Honda Cars, JSW MG Motor, Renault India, Nissan India and Skoda Volkswagen India, will offer discount of 1.5 per cent, or ₹20,000, on the ex-showroom price of the new car, whichever is less, against the PV scrapped by the owner in the last six months.

It was also pointed out that individual PV manufacturer may have the liberty to extend this discount only on the identified models, within their vehicle portfolio.

CV manufacturers, including Tata Motors, Volvo Eicher Commercial Vehicles, Ashok Leyland, Mahindra & Mahindra, Force Motors, Isuzu Motors and SML Isuzu, will offer discount equivalent to three per cent of the ex-showroom price for a commercial cargo vehicle of more than 3.5 tonne, it said.

“Discount to be offered to a person buying a vehicle against a Traded Certificate of Deposit of a Scrapped Commercial Vehicle would be equivalent to 2.75 per cent of the ex-showroom price for scrapping a commercial cargo vehicle with more than 3.5 tonne gross vehicle weight (GVW); and a discount equivalent to 1.25 per cent of the ex-showroom price against a Traded Certificate of Deposit for scrapping a commercial cargo vehicle with less than 3.5 tonne GVW,” the MoRTH added.

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