Sighting an emerging business opportunity, India’s largest truck maker, Tata Motors Ltd is planning to build vehicle scrap yards in Howrah, Karnal, Hyderabad and Greater Mumbai along with its dealers.
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Tata Motor’s Scrapyard
According to their plan, Tata Motors may not invest directly in them but will provide technical know-how and expertise for these dismantling units but.
Basically, the investments will be brought in by the dealers themselves.
Initially, the company will start with these four units but late on may plan to expand the scrapping business.
Hence creating a new revenue stream for its dealers.
Sources said, “in the coming months, the company may also collaborate with public sector enterprises but, initially, they may choose to go on their own. The financial health of the dealers is a crucial factor here since many of them incurred losses due to the substantial decline in sales over the past few years. This investment, though, will be for the long term,”.
Why Would This Happen?
The recently launched India’s new vehicle scrapping policy directs mandatory scrapping of commercial vehicles after 15 years if they don’t meet fitness or emission criteria.
This move is likely to generate new sales for automakers.
To encourage this policy, the government has proposed a road tax rebate of 15-25% along with a full registration fee waiver for the new purchase after scrapping.
In addition to that, a price discount of 5% from the manufacturer against a certificate of scrapping will be provided.
Besides that, scrap yards will also offer a price to the old vehicles being scrapped, which will be 4-6% of the price of a new vehicle.
Vehicle Scrapping A Business Opportunity
India has 1.7 million heavy and medium commercial vehicles older than 15 years, without a valid fitness certificate according to the Road ministry data.
While the number of light vehicles older than 20 years stands at more than 5.1 million.
According to the sources, “Vehicle scrapping is expected to become a thriving business in the coming years. Hence, most automakers are interested, and the number of old vehicles, especially commercial vehicles, is staggering. So the potential is huge. Most automakers are expected to tie up with some other company to get the technology involved in the scrapping of vehicles. Tata Motors being the biggest commercial vehicle manufacturer is definitely going to benefit from this policy in the years to come,”.
More Scrap Yards
In the same regards, a Tata Motors spokesperson said, “We do not comment on speculations,”.
It seems that the top automakers are already considering building similar kinds of scrapyards.
In the same line, Maruti Suzuki India Ltd announced a tie-up with Toyota Motor Corp’s subsidiary, Tshusho India, for setting up vehicle dismantling units across the country last year.
Similarly, Mahindra Intertrade Ltd has also partnered with MSTC Ltd, a public sector unit under the steel ministry, for opening such scrapyards.
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