Vehicle Scrapping Policy: ICRA Ltd Response

Scrappage policy to be a positive for the Indian auto component industry, with 3-4% upside to revenues in FY2024: ICRA 

“Notwithstanding the lower demand from the aftermarket segment, ICRA expects that the scrappage policy will be positive for the auto component industry and it will benefit from higher demand for new vehicles from FY2024 onwards (with 3-4% upside) owing to a favourable incentive structure. The same will more than offset the loss of revenues from the aftermarket business, which may be pegged at 3-5% because of part scrapping of vehicles undergoing the fitness test. Further, the policy will also improve raw material availability through metal recycling and aid in reducing imports.”

by Ms. Vinutaa S, Assistant Vice President & Sector Head, ICRA Ltd