Auto manufacturers have agreed to offer discounts between 1.5% and 2.75% on commercial and passenger vehicles against a scrappage certificate of an old vehicle for a limited period of one or two years. The decision was announced after a meeting between Indian automobile manufacturers and Minister for Road Transport and Highways Nitin Gadkari on Tuesday.

However, this scrappage discount will replace the discount customers were getting for exchanging their vehicles from car dealers. Further, manufacturers are free to offer these discounts on select models within their vehicle portfolio. 

These benefits were evisaged in the Scrappage Policy, 2021, following which Mr. Gadkari also informed Parliament on March 18, 2021 that he had issued an advisory to auto manufacturers to offer a discount of 5%, among other benefits such as a discount on road tax that State governments were requested to offer.

Manufacturers of passenger vehicles such as Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai Motor, Kia, Honda Cars, Toyota, JSW MG Motor, Renault India, Nissan India, Skoda and Volkswagen India will offer a discount of 1.5% of the ex-showroom price of new car, or ₹20,000, whichever is less. This discount is against a passenger vehicle scrapped by the owner in the last six months and valid only for a limited period of one year.

Manufacturers of commercial vehicles such as Tata Motors, Volvo Eicher Commercial Vehicles, Ashok Leyland, Mahindra & Mahindra, Force Motors, Isuzu Motors and SML Isuzu have offered a discount of 3% of the ex-showroom price for a commercial cargo vehicle with more than 3.5 tonne gross vehicle weight, and a discount of 1.5% for a commercial cargo vehicle with less than 3.5 tonne gross vehicle weight. The benefit can only be claimed by the owner of the vehicle.

Buyers will have to submit a scrappage certificate to avail the benefit. Details of the scrapped vehicle will also have to be entered in the national register of vehicles called the Vahan system.