Auto dealers should open vehicle scrapping units, says Nitin Gadkari

Union Road Transport and Highways Minister Nitin Gadkari on Thursday urged automobile dealers to expand their business horizons by opening vehicle scrapping facilities and fitness centres.

Addressing the fifth Auto Retail Conclave, Gadkari said, “Yeh khatre ki ghanti hai (The alarm bells are ringing),” while emphasising on the multiple challenges faced by auto dealers, which include diminishing profit margins, increasing capital expenses, and the looming threat of online booking and sales by automobile manufacturers.

The minister said the government was actively promoting a circular economy, and the government will grant permission to dealers to start vehicle scrapping facilities.

“I strongly encourage dealers to explore the potential of fitness centers, scrapping facilities, and driver training centers, as they are well-suited to complement your current business endeavours,” Gadkari explained.

 

The minister’s appeal comes at a time when the government’s ambitious Vehicle Scrappage Policy, introduced in January 2021, has not provided the desired results.

Till March 31, 2023, registered facilities have scrapped 11,025 vehicles, which include 7,750 private vehicles and 3,275 government vehicles, according to an answer provided by Gadkari in the Rajya Sabha.

This figure is notably low considering the total number of vehicles that are over 15 years old.

In response to a question in the Rajya Sabha, Gadkari revealed that 24 states/Union Territories have collectively reported a total of 2,56,935 government-owned vehicles over 15 years.

The shortage of scrapping centers is another significant factor contributing to the sluggish progress. Currently, there are only 34 Registered Vehicle Scrapping Facilities (RVSFs) nationwide, according to the Ministry of Road Transport and Highways data.

He said that the use of scrapped vehicle materials saves 33 per cent on raw material costs, while increasing new vehicle sales by up to 20 per cent.

Gadkari highlighted India's efforts to promote the adoption of alternative fuels and biofuels, while asserting the government's ambition to become the leading producer of green hydrogen.

He added the need to establish hydrogen fuel stations, ethanol production facilities, and electric vehicle (EV) charging stations.