Vehicle scrappage policy could increase demand for used luxury cars: Here’s why

The used cars will continue to offer great value as compared to new cars. A majority of the pre-owned cars in India are five years old when they are sold.

By:April 9, 2021 4:14 PM
Mercedes-Benz A-Class vs BMW 2 Series Gran CoupeImage used for reference

The vehicle scrappage policy is in the news these days. The reason for the same is the fact that now we have a legit source of disposing off our old and unhealthy vehicles. At the same time, enthusiasts who want to ensure that they don’t really have to sell their prized possessions to someone else, can scrap the vehicles after they are done with using them. Another way of looking at the pros of the scrappage policy is the fact that there will be a fresh influx of vehicles coming into the used market. Those looking at luxury cars can now resort to having fresher stock of vehicles coming in. This in turn should increase the demand for used luxury cars. We aren’t the only ones to have seen this as majority of luxury car market experts too feel the same. Express Drives spoke with Jatin Ahuja, founder, Big Boy Toyz as well as Sumit Garg, MD of Luxury Ride about their thoughts.

Also Read India vehicle scrappage policy: How some clarity from government could help carmakers

Sumit said

The voluntary scrappage policy, can drive the growth of used car volumes as customers start replacing their old cars with younger cars. It will enable the supply of younger vehicles in the market which will help in rationalising the prices. Most of the used cars are gradually making their way into organised retail channels. The used cars will continue to offer great value as compared to new cars. A majority of the pre-owned cars in India are five years old when they are sold. This means there is plenty of life left in the used car you buy before you have to consider scrapping the car. However, given the voluntary nature of scrappage, it might take some time for customers to understand its benefits and adopt it. If the policy is defined well, about 28 million vehicles could go off road by 2025, largely comprising two-wheelers. It would reduce carbon dioxide emission by 17 per cent and cut air particulate matter by 24 per cent. Also, if half the Bharat Stage-II and III vehicles go off the roads, it would save eight million tonnes of oil a year.

Jatin doesn’t seem to quite agree but we feel this is because of BBT’s business model. Jatin says

The scrappage policy has not created much of an impact on the pre-owned luxury car market as the consumer bracket that the industry caters to is very much different from the general used car industry which majorly deals in utility vehicles. Usually, the consumers who prefer pre-owned luxury cars are car enthusiasts who have a fetish for different sports cars/ supercars and luxury/ luxury utility vehicles. Usually we at Big Boy Toyz house cars that are either 0km run or are a year or two old and are in excellent condition (vetted by the 151 certification process of Big Boy Toyz ). To have such cars at excellent condition within a price of choice - which is providing value for money, does not make the scrappage policy a concern for the brand or the consumers as a whole. Further in the luxury segment the hands of the owners changes in around three years which does not fall under scrappage policy regulations. However, the scrappage policy has ensured that the supply of the cars are in tandem with the demand of the cars in the utility vehicle segment mostly, as it does ensure that consumers opt for changing their vehicles sooner than later.

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