Vehicle Scrappage Policy - Insights From The Ministry: ICICI Securities

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ICICI Securities Report

We hosted the Ministry of Road Transport and Highways officials for a call to discuss the vehicle scrappage policy. Key takeaways include -

1. medium and heavy commercial vehicle customers opting for scrappage could gain Rs 100-150 kilo per vehicle.

2. vehicle fitness (not vehicle age) is key to qualifying for scrappage, deeper district-level expansion of automated fitness centers (initial target: 75) is necessary;

3. creation of adequate scrappage capacity would require inflow of private capital, scale of large private aggregators would need to expand to ~15 kilo tonne per annum (current: 2-5ktpa);

4. government scrappage demand (FY23 onwards) is likely to be ~237k units; and

5. used commercial vehicle financiers opportunity remains limited due to the policy.

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