Impact of Vehicle Scrapping on Used Car Market in India

The Indian automotive market is going through a major shift, and a big part of this change is due to the new vehicle scrapping policy. While most of us are familiar with the second-hand car market, what many don't realise is how the scrapping of old vehicles is reshaping it. In this blog, let’s explore how this change is impacting the used car segment and what it means for buyers, sellers, and even vehicle scrap companies in India.

1. Understanding the Vehicle Scrappage Policy

In simple words, the Vehicle Scrappage Policy is a government initiative aimed at removing old, polluting, and unfit vehicles from Indian roads. According to the policy, private vehicles older than 20 years and commercial vehicles older than 15 years can be scrapped if they fail to pass the fitness test.

The main goal is to reduce pollution, boost the adoption of safer and fuel-efficient vehicles, and promote the circular economy. With fitness tests and green certificates becoming mandatory, many vehicle owners are now turning to authorised scrap dealers.

2. Rise of the Used Car Market in India

Before we understand the full impact, let’s look at the current status of the used car market. In India, over 4.4 million used cars were sold in 2023, which is more than double the number of new cars sold. The primary reason is affordability.

People from Tier 2 and Tier 3 cities are also actively buying second-hand cars, thanks to online platforms like OLX Autos, Spinny, and Cars24.

3. Positive Impact of Vehicle Scrapping on Used Car Market

a) Boost in demand for newer used cars

With old cars being scrapped due to new rules, people are more inclined to buy second-hand vehicles that are just 5–7 years old. These cars come with BS6 engines, better mileage, and improved safety features.

b) Better vehicle quality in the market

Scrapping removes junk cars from circulation, which means the used car market now has better inventory. It also reduces the chances of buyers getting faulty or polluting cars.

c) Incentives from OEMs and dealerships

Auto brands are offering scrappage benefits and exchange bonuses. This encourages people to scrap their cars and use the money to buy either a new or certified pre-owned car.

4. Negative or Neutral Impacts on Used Car Market

a) Decline in availability of low-cost older cars

Previously, cars older than 12 years were still available in rural or low-income markets at ₹50,000–₹1 lakh. These are now being removed, which impacts affordability for some buyers.

b) Price hike for budget second-hand cars

Since old cars are being phased out, the demand for slightly older models (like 2014–2017 cars) has increased. This demand pushes up prices, which affects budget-conscious buyers.

c) Rise in grey market transactions

Some owners are selling old cars without proper deregistration to avoid scrapping. This practice impacts the transparency and quality of used car deals.

5. Influence on Car Dealerships and Brokers

Many car dealerships are now partnering with authorised vehicle scrap companies in India to offer a full-service package — scrap your old car, get a certificate, and upgrade to a used or new car.

They are also expanding their certified used car segment (like Maruti True Value, Mahindra First Choice, Hyundai H Promise) which gives buyers more confidence. Evaluation tools, warranty offers, and finance schemes are now commonly available in the used car space.

6. Regional Trends: Metro vs Non-Metro Impact

Cities like Delhi-NCR, Mumbai, and Chennai have stricter enforcement of vehicle fitness norms. Hence, scrappage activity and its impact on used car supply are more visible here.

On the other hand, in smaller cities or towns, implementation is slow, so older vehicles are still in use or being sold at local garages or unregistered markets.

Searches like “old scrap cars for sale in India” are growing in Tier 2 cities where people are still looking for affordable second-hand cars for basic transport needs.

7. Future Outlook for Used Car Buyers and Sellers

With increased scrapping, the used car market in India will become more organised, cleaner, and digitally enabled. The average age of available used cars will drop, and newer vehicles with updated features will dominate listings.

Online platforms will continue to play a big role. Companies like Cars24 even offer doorstep evaluation, car inspection reports, and instant online quotes.

8. Tips for Buyers & Sellers

Buyers:

• Avoid cars older than 12 years if you're in Delhi, Mumbai, or Bengaluru.
  
  
• Ask for fitness certificate and pollution compliance.
  
  
• Check platforms for verified listings with warranty options.
  
  

Sellers:

• Consider scrapping if your car is over 15–20 years old.
  
  
• Connect with authorised vehicle scrap companies in India to get proper documentation.
  
  
• Use scrapping certificate to avail exchange bonuses.
  
  

Conclusion

The vehicle scrapping policy in India is not just about getting rid of old cars — it’s transforming the entire used car ecosystem. From improved inventory to higher safety and eco standards, it’s a win for buyers and the environment.

But yes, for those looking for ultra-cheap cars, the shift might be a bit tough. Still, the long-term benefits outweigh the short-term challenges.

Whether you're planning to sell your old car or looking for one to buy, now is the time to explore certified options and stay informed. And if you have a really old car gathering dust, maybe it’s time to check out vehicle scrap companies in India — your junk might just be worth something!

Let me know if you'd like to convert this into a blog format on WordPress or need banner images and CTA ideas!