Scrappage policy may boost M&HCV sales by 60 pct over the next three years

By: |
New Delhi | Published: March 20, 2018 5:28:41 AM

The already buoyant commercial vehicle (CV) sales could get a big leg-up with the government’s move to phase out vehicles more than 15 years old.

commercial vehicle, M&HCV sales, Vehicle fleet Modernisation Programme The move is part of the Voluntary Vehicle fleet Modernisation Programme (V-VMP) policy.

The already buoyant commercial vehicle (CV) sales could get a big leg-up with the government’s move to phase out vehicles more than 15 years old, with industry players estimating an incremental demand of about 700,000 units for medium & heavy vehicles (M&HCV) over the next 3 years.

This when viewed in the context of present annual M&HCV sales of just under 3,50,000 units estimated for the current fiscal (294,553 units were sold in the period from April to February, 2017), represents a near 67% increase in annual demand over the next three years.

Gopal Mahadevan, CFO, Ashok Leyland, said the introduction of the scrappage policy will have a very positive impact on the commercial vehicle industry, estimating that it will translate into additional demand for 6-7 lakh M&HCVs over the next 2-3 years. He added, “Under the policy, the government intends to incentivise scrapping of 15-year-old vehicles, which is a good incentive for medium and large fleet operators to replace their depreciating fleet.”

The move is part of the Voluntary Vehicle fleet Modernisation Programme (V-VMP) policy which in its first phase aims at scrapping 15-year-old commercial vehicles. The policy recently received a nod from the finance ministry, and it has now been sent to the GST Council for final approval. It is expected to get final approval by the end of March.

Vinod Aggarwal, CEO, Volvo Eicher Commercial Vehicles, said he expects the GST Council to offer a sizeable incentive to fleet operators to buy brand new trucks. In anticipation of an increase in demand for new trucks, Aggarwal said the company is making plans to increase capacity, and will take a call sometime in the next three months. He added that the industry has already started to make arrangements to meet the rise in demand that may come from the policy.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1‘Amethi MP Missing’ poster: Smriti Irani questions Sonia Gandhi in scathing reply to Mahila Congress’ barbs
2Rajya Sabha election 2020: Polls to 18 seats on June 19, announces Election Commission
3Ladakh standoff: Take parties, country into confidence over situation on border with China, Congress tells Modi govt