Rating agency, ICRA in its recent report mentioned that the ban on old diesel vehicles and the proposed V-VMP (Voluntary Vehicle Fleet Modernization) programme could result to 3% additional sales of new vehicles over the next 2-year.
Moreover, the development could also result to 3% increase in sales of 2-wheeler segments and 6-7% in additional sales of commercial vehicle vertical.
ICRA Ltd Senior VP Subrata Ray said the impact of the scrappage programme could be limited initially owing to moderate level of incentive (8-12 per cent) being offered.
The resale value of 11-plus old vehicles may be higher than the proposed rebate in the scrappage programme, as the resale value of some of the key car models older than 11 years range between 8-15 per cent in the second-hand market, he added.
“However, the program may become useful for owners of old diesel vehicles, especially in the wake of recent ban in Delhi-NCR and other states like Kerala and Chhattisgarh. As market value of older diesel vehicles fall, the scrappage policy may become attractive for customer segments like taxi owners and old trucks,” Mr. Ray said.
The population of vehicles older than 11 years plying on Indian roads is estimated to be around 25 million.