Automobile Sector Will Get Support Through Scrap Policy

on Jul 13, 2021 | 12123 views

Written by Deepak sah                                                                                July 13, 2021

We can't forget the damage done by COVID-19 to the automobile sector. According to the Automobile industry association, the production stoppage at the automotive OEM and component supplier and lockdown imposed by the government resulted in the loss of 2300 crore daily. It also resulted in the loss of around 3.4 lakh jobs in the automobile sector. According to the Society of Indian automobile manufacturers, the automobile sector recorded negative growth in the sale of all segments of vehicles.

  • 2.24% drop in the sale of all passenger vehicles

  • 13.19% drop in the sale of two-wheeler vehicles

  • 20.77% drop in the sale of commercial vehicles 

  • 66.06% drop in the sale of three-wheeled vehicles

Due to less demand, many companies reduced their workforce which resulted in the loss of around 3.4 lakh jobs in the automobile sector.

Now automobile sector started growing slowly at a decent pace after the COVID19 challenge. India is the second-largest market of two-wheeler manufacturing after China. The market unit sales of two-wheeler in India was around 21.2 million and expected to reach 26.6 million by 2025. The reason for an increase in sales of two-wheelers in India is poor public transport facilities in many parts of the country and two-wheelers provide great comfort and mobility to Indian families. We all know the automotive industry is the backbone of the Indian economy. It contributes more than 7% of India’s GDP and it is one of the biggest job creators in the country. India's electric vehicle (EV) market is estimated to be a Rs. 50,000 crore (US$ 7.09 billion) opportunity by 2025, with two- and three-wheelers expected to drive higher electrification of the vehicles.

Scrappage policy, demand booster for the automobile sector

Recently in the Union budget, our finance minister announced a vehicle scrappage policy in 2021. Many questions came to our mind when we heard about the vehicle scrappage policy. Some common questions are

  • Do we need to scrap our old vehicles?

  • What will be the age limit of the old vehicles?

  • What are the other benefits of this policy?

Let's discover further and understand what scrappage policy is all about. Let's try to answer these questions and understand the benefits of this policy.

Vehicle Scrappage policy is a policy announced by our finance minister in Union Budget 2021 stating rules and regulations need to be followed while scrapping old vehicles. As per the policy old and unfit vehicles need to be scrapped. It is not a mandatory process, it is a voluntary process but defined by legal rules. Old vehicles whose age is around 15-20 years need to be scrapped compulsorily. The vehicles generally need to go under a fitness test and if your vehicle failed the test then your vehicle will be scrapped.

Benefits of vehicle scrappage policy :

  • Scrapping old and unfit vehicles will help in the reduction of pollution

  • Scrapping of old and unfit vehicles will help in increase in demand of new vehicles

  • Scrappage policy will help the automobile sector to generate more job opportunities.

  • New vehicles will be safer with more safety features  in comparison to old and unfit vehicles

  • There is a chance that old car owners might get tax benefits for scrapping old vehicles

Opportunity for the automobile sector

As per the data, there are 17 lakh medium and heavy commercial vehicles that are old and unfit but still running on the road, there are 51 lakh light motor vehicles that are more than 20 years old and 34 lakh light motor vehicles which are 15 years old. So the new Vehicle scrappage policy will help in boosting the demand and sales of the automobile sector. As per the rules, the owners of such vehicles need to scrape their vehicles if they fail the fitness test and this will raise the demand for vehicles which will be an opportunity for the automobile sector.

Appreciating the move from the union government, a spokesperson of Tata Motors said, “Provisions in the policy such as compulsory fitness certificate, disincentivising re-registration of commercial vehicles after 15 years and private vehicles after 20 years, would encourage the removal of old and polluting vehicles from the system. Largely, it addresses intents of all stakeholders from low import bill for scrap and crude oil, job opportunities for Micro, Small & Medium Enterprises (MSMEs), possibility of upside in new vehicle sales for OEMs, low operations cost for vehicle owners, safer & cleaner vehicles for consumers and a sustainable environment for all.”

As per the data, there are around 1.2 crore vehicles will be removed from the road under this policy which will result in the demand for new vehicles and this will also result in overall turnover growth of the automobile sector from 4.5 lakh crore to 5.5 lakh crore. Due to the vehicle scrapping policy, the recycling business will grow and it will be at its peak in the automobile sector. Due to this recycling process, the price of raw materials for manufacturing new vehicles will fall as a result the price of vehicles will also fall. Due to the recycled product, there will be a lesser dependency on the imported material which will reduce the production cost and the customers can buy vehicles at a low price. And this will boost the demand for new vehicles. As per the data, automobile industry generates around 1.45 lakh crore from export and now this figure is expected to increase to 3 lakh crore due to the implementation of the Vehicle scrappage policy. The aim of this policy is to make India a global automobile manufacturing Hub in India. According to experts, this policy will attract about 10,000 crore investment in the automobile sector. And the government also expects that this policy will create around 3.70 crore jobs in the organised sector in the automobile industry. And we all know demand will increase as a result many automobile companies will also hire manpower to meet the demand and for smooth supply of vehicles.

Benefits to the automobile franchise business

The new Vehicle scrappage policy will help in boosting the demand and sales of the automobile sector. As per the rules, the owners of such vehicles need to scrape their vehicles if they fail the fitness test and this will raise the demand for vehicles which will be an opportunity for the automobile sector. As a result many automobile franchise businesses will grow and they will try to expand in different parts of the cities. As the automobile sector will boom then the demand for automobile franchise business will rise and it will lead to job creation in the society.

There are lots of franchise opportunities available under the automobile franchise business  like:

  • Dealer and distributors franchise business

  • Automobile service franchise business

  • Spare parts franchise business 

  • Automobile washing franchise business

  • Automobile recycling franchise business

 Best automobile franchise business opportunities in India

1.EV Techo Electra Pvt ltd - It is one of the leading and fastest-growing electric motorcycles manufacturers in India.

Investment -

Outlets-70+ all over India

Investment - 20 lakh -30 lakh

2.First Choice - Mahindra First Choice Wheels Limited is a part of 6.7 billion Mahindra Group. The company is India's largest MultiBrand Preowned Car company which deals in buying and selling of MultiBrand used cars backed by warranty and free service.

Outlets- 1000+ all over India

Investment -50lakh - 1 crore

3.Go Waterless: Go Waterless started in October 2019 as an innovative concept in professional car cleaning services with a motto to revolutionize your car washing experience. With extensive research & development for 2 years, they have successfully developed a 100% Herbal liquid that can clean the car without a single drop of water. With no Scratch or Side effects on the car.

Outlets- 60+ all across India

Investment-5 lakh-10 lakh

4.Dr Wheelz Franchise: DrWheelz is a doorstep car service platform, starting from a simple jump-start to a major engine failure that can be fixed at doorstep by our car doctors. They cater to all the cars starting from a Tata Nano to a Lamborghini. Almost 80% of a car's needs can be met at the doorstep and their focus is exclusively on that 80%. They are the country's only doorstep service centre operating without even one physical outlet.

Outlets-15+ all across India

Investment-5 lakh-10lakh

5.Spares Hub: SparesHub brand is owned by Iridium Automobile Private Limited. It is India’s largest B2B e-commerce company in India. The company has 7+ years of expertise in the car parts business and has 520+ registered customers across India. It is a team of 72 full-time employees across three offices in Pune, Mumbai and Bangalore. SparesHub provides parts from 80+ brands for all car models in India ranging from Maruti Suzuki to Mercedes Benz under one roof.

Outlets- 15-20 all across India

Investment - 5 lakh - 10 lakh

8.Soiltech: It is one of the leading Agri equipment manufacturing brands. The world-class quality of Soiltech farm equipment makes the brand farmers' first choice in India and abroad. Headquartered in India, the brand has an existence in over 100 other countries. With more than three decades of experience in manufacturing tradition and trading in the farming and agricultural industries, Soiltech has become synonymous with quality farm and agricultural equipment.

Outlets-150+ all across India

Investment-10 lakh - 15 lakh

7.SpeedForce: SpeedForce is one of the leading two-wheeler servicing franchise businesses in India. It has a chain of branches all over India. They provide innovative repair and maintenance services for any two-wheeler. They had a wide range of trustworthy services like pick up and drop facility, on-road breakdown support, insurance support, Annual Maintenance Contracts, warranty program on spare parts, and lubricants. They are bringing a revolution in servicing two-wheelers. With well-equipped two-wheeler service stations and skilful mechanics, They provide quality services with excellent packages that are intended to offer you great maintenance and saving. 

Outlets - 125+ all across India

Investment- 7.5 lakh

8.ServiceForce franchise: It is India’s Largest 2 Wheeler Multi-Brand Workshop Chain. They are offering Home Service, Breakdown and accidental assistance, PUC, Insurance and Pick drop facility to any 2 wheeler. Serviceforce has made a strategic alliance with Indian Oil Corporation Ltd (IOCL), India’s largest Enterprise for setting up service centres at its Petrol Stations, With the high footfalls at the Petrol pumps 

Outlets- 250+ all across India

Investment-10-15 lakh

There are lots of franchise opportunities available in the automobile sector and if you are planning to invest in the automobile franchise business you can visit franchiseBazar and you can select from listed brands from the website as per your plan. You can also clear your doubts from experts.


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