Upset about deteriorating air quality in Delhi, NGT, established under the National Green Tribunal Act 2010, has ordered a blanket ban on vehicles in Delhi more than 15 years old or bought before 1999.
According to a recently published World Health Organisation report, the air in Delhi is the most polluted in the world.
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Experts believe the order will not have any major positive impact on the car and the two-wheeler manufacturers as the average vehicle replacement cycle in India is not more than five years. Used car dealers, however, will surely feel the heat.
An industry insider said: “We are trying to gauge how binding the NGT’s ruling is and if it can actually be implemented. According to some estimates, there are 500,000 to 700,000 light vehicles aged over 15 years plying on Delhi roads. Questions are likely to be raised on why the ruling should be applicable only in Delhi and why no incentive in terms of time or money is being considered for such vehicle owners while implementing such an order. There are likely to be appeals against this ruling.”
While most say sales of new vehicles might not take-off immediately due to bar on 15-year old vehicles plying on Delhi roads, there could be an impact on resale value of pre-owned cars in the market. “The ruling bars and not scraps 15-year old vehicles from plying in Delhi. These cars may now be liquidated to other states. Usually, vehicle manufacturers do not offer exchange schemes for vehicles which are over eight years. They may now see an opportunity and come up with schemes which may push sales of small cars to an extent, but resale value of pre-owned cars will take a hit because of this cap,” said Puneet Gupta, associate director at automotive consultancy firm IHS India.
V G Ramakrishnan, managing director, South Asia, Frost & Sullivan, concurred: “This ruling — if extended to rest of the country — will not have a significant impact on the sale of new cars immediately. But it will give a boost to the auto sector in the long run. Cars which are 12 years old will be impacted the most.”
Automobile industry, in association with its apex body the Society of Indian Automobile Manufacturers, has been pressing the government to come out with some kind of scrappage incentive scheme which will induce owners of older vehicles to voluntarily give up their cars.
Nearly five million vehicles were sold in 2000 in India (excluding tractors) according to SIAM data. As of last financial year a total of 18.4 million vehicles were sold in the domestic market including 2.5 million passenger vehicles and 14.8 million two-wheelers.
The used car market in India is bigger than the new car market, according to estimates of organised players. Presently the ratio of sales of used cars to new cars is 1.2:1 and is expected to rise to 1.5:1 in the next few years.
The Automotive Research Association of India a co-operative industrial research association by the automotive industry, was mandated with a task of giving ‘health certificates’ to older cars which would allow them to ply on the roads.
Market watchers expect sales of more than 10 year old vehicles registered in Delhi to rise beyond Delhi jurisdiction and have a spill over effect on neighbouring states.
The tribunal did not elaborate on the fate of vintage cars which are part of the collectors item of scores of car enthusiasts across the country.