Automakers to offer discounts of up to Rs 25,000 on new cars to buyers who scrap old vehicles

After years of deliberations and discussions, the central government and the automobile industry have come to terms to provide discounts to consumers who purchase a new car against a scrapping certificate. The move is expected to provide relief to consumers ahead of the festive season.

Union Minister for Road Transport & Highways, Nitin Gadkari held a detailed interaction with a delegation of CEOs from the Society of Indian Automobile Manufacturers (SIAM). The meeting also included Minister of State for Road Transport and Highways Harsh Malhotra, Minister of State for Road Transport and Highways Ajay Tamta, and Secretary of the Ministry of Road Transport and Highways (MoRTH) Anurag Jain.

The scrappage scheme, a key part of the government's push towards fleet modernisation and a circular economy, offers discounts on new vehicle purchases when customers present a scrappage certificate for their old, end-of-life vehicles. This initiative, supported by leading commercial and passenger vehicle manufacturers, aims to incentivise the scrapping of older, less efficient vehicles, thereby reducing pollution and enhancing road safety.

Passenger vehicle manufacturers such as Maruti Suzuki, Tata Motors, Hyundai, Kia, Toyota, and others will offer a 1.5 per cent discount or Rs 20,000, whichever is lower, on new car purchases against scrapped vehicles. Mercedes Benz India has gone a step further by offering a flat discount of Rs 25,000, over and above existing offers.

Commercial vehicle manufacturers including Tata Motors, Volvo Eicher Commercial Vehicles, Ashok Leyland, Mahindra & Mahindra, Force Motors, Isuzu Motors, and SML Isuzu have committed to offer discounts equivalent to 3 per cent of the ex-showroom price for scrapped commercial cargo vehicles over 3.5 tonnes. For vehicles under 3.5 tonnes, a 1.5 per cent discount will be offered. Additionally, discounts of 2.75 per cent and 1.25 per cent are available for buyers using a traded certificate of deposit for scrapping heavier and lighter commercial vehicles, respectively.

Despite the government's efforts, voluntary scrapping of vehicles has not gained traction. There is a target to scrap 90,000 old government vehicles by March 2025. The government has taken steps to set up 60 registered vehicle scrapping centres and 75 automated testing stations.