Comments
The voluntary-vehicle modernisation programme (V-VMP) announced by the Ministry of Road Transport & Highways can boost commercial vehicle (CV) sales volume by a cumulative 65 per cent (over sales in fiscal 2016) between fiscals 2018 and 2020, an analysis by Crisil Research said in a press statement.
According to the agency, 6.8 lakh CVs worth Rs 66,500 crore were sold in fiscal 2016. The V-VMP scheme could lead to incremental sales of 4.4 lakh CVs (primarily MHCVs) worth approximately Rs 66,000 crore.
In addition, approximately 2 lakh CVs would get scrapped and replaced in the normal course through the three fiscals, given the current junking rate of about 67,000 CVs annually. Hence total vehicles opting for the scheme would be 6.4 lakhs.
More than 85 per cent of the incremental sales would be of medium and heavy trucks because of their lifespan of about 20 years. So many of them bought before the March 2005 cut-off date for the V-VMP scheme would still be plying.
Intermediate commercial vehicles and tractor-trailers, too, have a similar lifespan, but those purchased before March 2005 are few in number. Pick-ups, upper light CVs and MHCV buses, which have a lower lifespan of 15- 17 years, will have a smaller share in vehicles being scrapped – and most of them would anyway be scrapped.
Sub-1 tonne CVs would benefit the least given that the segment was created only in 2005 and vehicles would have been purchased after the V-VMP cut-off date.
Prasad Koparkar, Senior Director, Crisil Research, said: “Based on the equation of current resale value versus benefits offered under V-VMP, we expect trucks that are 13 years old or older opting for it. For trucks newer than 13 years, current resale value is more than the benefits offered under the scheme. In case additional dealer discounts are not offered, cut-off age of trucks opting for the scheme could go to 14 years.”
Given that the scrap value offered by the scheme can be availed of by transporters even in the open market, the actual additional benefit in V-VMP would be on account of excise duty and road tax waivers, and some additional dealer/manufacturer discount. However, dealers are already offering 8-10 per cent discount on purchase of new trucks, so further sops would be hard to come by.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.