Scrappage is a profit accelerator. By some industry estimates, it can add 30 per cent or more to automaker profits, not through innovation but by forcing replacement, acquiring old cars cheaply, recycling-retrofitting their parts, and locking consumers into high-margin service and spare-part ecosystems. Pollution is the cover story; profit is the motive.
Delhi’s air is “filthy”—but not for the reasons the government and the automobile lobby keep selling. The Tughlaqi GRAP curbs on entry of cars thawing Delhi into chaos is dishonest. And that dishonesty conveniently channels policy, subsidies and public anger toward cars, consumers and scrappage—while the dirtiest culprits continue to billow away, largely untouched.
It is being turned into an all-India scourge.
While exact figures for “prospected old car parts” are scarce, the Rs 94,000 crore auto-industry significantly boost profits via high-margin new spare parts (often 15-90%+ margins vs. 4-10% on new cars), as cars with 40 plus-year life are junked in ten years. Post-scrap India’s aftermarket booms, creating huge revenue in recycling/refurbishing,
The Emissions Myth
The standard defence of vehicle scrappage is emissions compliance—Euro-VI versus older norms. In real-world urban, the difference in tailpipe emissions of Euro-I and Euro-VI vehicles rarely exceed one percent.
Delhi’s air is shaped far more by construction dust, industry, coal-fired plants, crop burning and winter inversion. Cars are minor players. They are targeted as they are the easiest to regulate—and the easiest to monetise. Even ultra-low sulphur Indian BS-VI diesel used since 2020 is the cleanest available globally, but being junked despite a higher fuel efficiency
What the Science Actually Says
A Centre for Research on Energy and Clean Air (CREA) study shows nearly one-third of Delhi’s annual PM2.5 is ammonium sulphate—formed when sulphide oxide (SO₂) from coal plants reacts with ammonia—rising to almost 50 per cent in winter smog. During peak pollution, PM2.5 jumps to 49 per cent, versus 21 per cent in summer and monsoon, pointing to regional coal emissions, not vehicle exhaust. Much of India’s PM2.5 is chemically formed in the air from coal-linked precursor gases—yet coal remains politically untouchable, while cars are easy and profitable targets.
The National Clean Air Programme (NCAP) fixated on PM10 and local sources, neatly sidesteps region-wide SO₂ coal emissions,
Windfall : A Forced Market for New Cars
For automobile manufacturers, 10-year-new car scrappage is a windfall.
The policy creates a captive, state-manufactured market for new cars. Owners are nudged—or forced—into replacement through bans, enforcement drives and a cocktail of “incentives”: scrappage certificates, road-tax rebates, and dealer discounts of around five per cent.
What is presented as choice is, in reality, coercion with paperwork.
This comes at a time when many households are already servicing seven- or eight-year EMIs on vehicles that are suddenly declared unfit.
The state is accelerating depreciation to zero by decree and compelling repurchase at full market price.
Cars Acquired for a Song
Vehicles are acquired for a fraction of their real economic value. A well-maintained car worth several lakh rupees in utility terms is reduced to scrap pricing, around Rs 20,000. Owners lose the asset; the ecosystem gains cheap raw material.
Scrapped vehicles yield 65–70 per cent steel, 7–8 per cent aluminium, copper, rubber and plastics. This material flows from registered scrapping facilities straight back into manufacturing supply chains. For automakers, this means lower raw material costs, reduced reliance on virgin inputs, and a steady pipeline of recycled metals—while simultaneously boosting new vehicle sales.
EVs, Subsidies, and Blind Faith
Alongside scrappage runs the government’s missionary push for battery electric vehicles, rolled out without serious evaluation of what happens after the showroom sale. Battery dumping grounds, recycling hazards, and age-bound end-of-life risks are treated as footnotes. Lithium-ion waste is someone else’s problem—preferably tomorrow’s.
Lithium mining itself—from South America to Australia—is ecologically destructive, water-intensive and socially corrosive. Public discomfort—range anxiety, safety concerns, even reports of giddiness and health effects—is dismissed as anecdotal noise.
NO₂: The Convenient Villain
Parallel to this runs the more coercive instrument: junking. Automobile and allied lobbies have suddenly discovered an unsubstantiated villain called NO₂ levels, now invoked to justify forcing functional vehicles off the road nationwide. The scientific basis is thin. The commercial payoff is enormous.
How the 30 Per Cent Is Made
Scrappage is not about clean air. It is about profit engineering.
India’s auto aftermarket is already booming at ₹94,000 crore in FY24, and forced scrappage accelerates it. New cars generate service contracts, warranties, insurance tie-ins and years of high-margin parts sales, while older vehicles—served by independent mechanics and non-OEM parts—sustain a consumer-friendly parallel economy that scrappage efficiently erases.
First, spare-parts margins: old cars repaired outside original equipment manufacturer (OEM) networks hurt profits, while new cars lock buyers into proprietary parts and service cycles, where margins jump from 7–10 per cent on vehicles to 15–90 per cent on spares. Second, recycled metal savings: scrappage delivers cheap steel and aluminium and even windshield and electronic chip under the banner of circular economy. Third, EMI-driven forced demand: citizens are pushed into loans for forced purchases. Together, these incentives explain why pollution science is selectively framed to blame local dust rather than structural sources.
EVs are subsidised despite unresolved environmental costs. Junking is rolled out nationwide under the banner of clean air for higher profits.
A Circular Economy—for Whom?
Proponents sell this as a “circular economy”: old cars reborn as new. Environmentally neat, economically rigged. Consumers lose assets at distressed prices; manufacturers gain cheap inputs and guaranteed demand, while intermediaries flourish and the state collects fresh taxes. Sustainability language disguises a one-sided transfer.
Enforcement worsens it. Barricades, spot seizures and discretionary checks turn commuting into coercion. Where discretion thrives, rent-seeking follows—harassment, selective targeting and quiet “settlements” included.
The Real Elephant – Smog
The irony is brutal. Data show vehicular emissions are not the primary driver of Delhi’s worst pollution episodes. Yet cars are punished, consumers are moralised, and cities are ritualistically shut down. Coal, dung cakes—whose sulphur dioxide emissions chemically manufacture PM2.5 at scale—remains the elephant in the smog.
This is not environmental policy. It is narrative management.
The crisis is real. The framing is engineered. Citizens are asked to junk vehicles, take fresh EMIs, and feel virtuous about EV badges.
India does not need more virtue signalling on wheels. It needs honest science, and reversal of age-bound forced car junking, a major drain on economy.
India’s auto aftermarket is already booming, with turnover nearing ₹94,000 crore in FY24. Forced scrappage accelerates this ecosystem. New cars mean new service contracts, extended warranties, insurance tie-ins, and years of high-margin parts sales.
Old cars, by contrast, often rely on independent mechanics and non-OEM parts. Scrapping them eliminates a parallel economy that benefits consumers far more than manufacturers.
A detailed study by the Centre for Research on Energy and Clean Air (CREA) shows that nearly one-third of Delhi’s annual PM2.5 load consists of ammonium sulphate—a fine particulate formed when sulphur dioxide (SO₂) emitted by coal-based plants reacts with ammonia in the atmosphere. During winter fog and smog episodes, that share rises to almost 50 per cent.
CREA’s numbers devastate the official narrative. During Delhi’s most polluted periods, PM2.5 contributions jump to 49 per cent, compared with just 21 per cent during summer and monsoon months. This is not the fingerprint of vehicular exhaust. It is the signature of regional sulphur dioxide emissions, atmospheric chemistry, and winter meteorology working in tandem.
A large share of India’s PM2.5, the study notes, is not directly emitted at all. It is formed from precursor gases—primarily from coal. Since going after coal is politically expensive. Going after cars is administratively easy—and commercially lucrative.
First, spare-parts margins. Old vehicles kept alive through repairs are bad for automakers. New vehicles lock consumers into proprietary parts, authorised service networks and inflated replacement cycles. While carmakers earn 7–10 per cent margins on new vehicles, margins on spare parts can range from 15 per cent to as high as 90 per cent.
Second, recycled metal savings. Scrapped vehicles provide cheap steel and aluminium, lowering input costs while being marketed as circular-economy virtue.
Third, EMI-driven forced demand. Scrappage converts citizens into captive buyers, pushed into loans for vehicles they neither planned nor needed.
Thread these together and the picture sharpens.
Pollution science is selectively framed to blame local dust—naturally high in tropical regions.
Scrappage is a profit accelerator. By some industry estimates, it can add 30% or more to automaker profits, not through innovation, but by forcing replacement, acquiring old cars cheaply, recycling their parts, and locking consumers into high-margin service and spare-part ecosystems. Pollution is the cover story; profit is the motive.
Delhi’s air is filthy—but not for the reasons the government and the automobile lobby keep selling. There may be a crisis. The diagnosis is dishonest. And that dishonesty conveniently funnels policy, subsidies and public anger toward cars, consumers and scrappage—while the dirtiest culprits continue to billow away, largely untouched.
The Emissions Myth
The justification most often offered is Euro-VI compliance. But the uncomfortable truth is that the difference in tailpipe emissions between Euro-I and Euro-VI vehicles, when measured as a share of overall ambient pollution, is marginal—often estimated at around 1% in real-world urban conditions. Delhi’s air is dominated by construction dust, industrial activity, power plants, crop burning, and geography-driven winter inversion. Private cars—especially petrol vehicles driven modest distances—are a minor contributor.
Start with the inconvenient science. A detailed study by the Centre for Research on Energy and Clean Air (CREA) shows that nearly one-third of Delhi’s annual PM2.5 load consists of ammonium sulphate—a fine particulate formed when sulphur dioxide (SO₂) emissions from coal-based thermal power plants react with ammonia in the atmosphere. During winter fog and smog episodes, that share rises to almost 50 per cent. In other words, at the very moment when Delhi chokes the most, half the poison in the air is chemically cooked far away, not tailpiped locally.
CREA’s numbers are devastating for the official narrative. During Delhi’s most polluted periods, PM2.5 contributions jump to 49 per cent, compared to a relatively modest 21 per cent during summer and monsoon months. This is not the fingerprint of vehicular exhaust. It is the signature of regional sulphur dioxide emissions, atmospheric chemistry, and winter meteorology working together. A large share of India’s PM2.5, the study underlines, is not directly emitted at all—it is formed in the air from precursor gases, primarily from coal, the CREA study notes.
Yet policy stubbornly clings to a different villain. The National Clean Air Programme (NCAP) remains fixated on PM10 and local sources, neatly sidestepping the region-wide SO₂ emissions from coal-fired power plants that science keeps pointing to. Why? Because going after coal is politically expensive. Going after cars is administratively easy—and commercially lucrative.
This is where the case file thickens.
A Forced Market for New Cars
For automobile manufacturers, however, the policy is a windfall.
The vehicle scrappage regime creates a captive, policy-driven market for new cars. Owners are nudged—or forced—into replacement through a mix of bans, seizures, and incentives: scrappage certificates, road-tax rebates of up to 25%, and dealer discounts of around 5%. What is presented as “choice” is in fact compulsion under duress.
This comes at a time when many households are already servicing 7–8 year EMIs on vehicles that are suddenly declared unusable. The loss is not marginal. It is catastrophic for middle-class families who planned ownership over decades, not policy cycles.
In effect, the state is accelerating depreciation to zero by decree—and compelling repurchase at full market price.
Cars Acquired for a Song
The insult is compounded by what happens next. Vehicles scrapped under the policy are often acquired for a fraction of their real economic value. A well-maintained car worth several lakhs in utility terms is reduced to scrap metal pricing. Owners lose the asset; the ecosystem gains cheap raw material.
Scrapped vehicles yield substantial quantities of steel (65–70%), aluminium (7–8%), copper (1–1.5%), rubber, and plastics. This material flows into registered scrapping facilities and then back into manufacturing supply chains. For carmakers, this means lower raw material costs, reduced dependence on virgin inputs, and a steady supply of recycled metals—all while simultaneously boosting new vehicle sales.
It is hard to imagine a more perfect “win-win” for manufacturers.
The government has decided to subsidise battery electric vehicles with missionary zeal, without a serious, transparent evaluation of what happens after the showroom sale. Battery dumping grounds, recycling hazards, and a forced age-bound end-of-life ecosystem are treated as footnotes. Lithium-ion battery waste is someone else’s problem, preferably tomorrow’s. Lithium mining itself—from South America to Australia—is ecologically disastrous, water-intensive, and socially corrosive. None of this figures in glossy EV brochures or policy press releases.
Even the technology economics are waved away. EV adoption is pushed ahead of grid cleanliness, ahead of storage solutions, and ahead of credible lifecycle studies. Public discomfort—range anxiety, safety concerns, even reports of giddiness and health discomfort linked to EV usage—is brushed aside as anecdotal noise. The objective is not environmental prudence; it is market creation.
Parallel to this runs the more coercive instrument: car junking. Automobile and allied lobbies have suddenly discovered an unsubstantiated villain called “NO₂ levels,” which is now invoked to justify forcing perfectly functional vehicles off the road across India. The scientific basis is thin; the commercial payoff is fat.
Here is where the 30 per cent figure fits—not as rhetoric, but as motive.
Scrappage is not about clean air; it is about profit engineering. Automakers and their supplier ecosystems stand to gain 30 per cent or more in additional margins through three linked channels.
First, spare-parts margins: older vehicles kept alive through repairs are bad for automobile makers; new vehicles lock consumers into proprietary parts, service contracts and inflated replacement cycles. Second, recycled metal savings: scrapped vehicles yield cheap steel and aluminium, lowering raw material costs while being sold as “circular economy virtue.” Third, EMI-driven forced demand: scrappage converts citizens into captive buyers, nudged—or shoved—into loans for new vehicles they neither planned nor needed.
Thread these together and the picture sharpens. Coal plants keep emitting sulphur dioxide because confronting them disrupts power economics and entrenched interests. Pollution science is selectively framed to blame local dust—naturally high in tropical regions anyway—and vehicles. EVs are subsidised despite unresolved environmental externalities. Junking policies are rolled out nationwide under the banner of clean air, while quietly delivering a 30 per cent profit windfall to the auto-industrial complex.
Meanwhile, Delhi keeps choking.
The irony is brutal. The data shows that vehicular emissions are not the primary driver of Delhi’s worst pollution episodes. Yet cars are punished, consumers are moralised, and cities are ritualistically shut down. Coal—whose sulphur dioxide emissions chemically manufacture PM2.5 at scale—remains the elephant in the smog.
This is not environmental policy; it is narrative management. A crisis is real, but its framing is engineered. Citizens are asked to junk vehicles, buy new ones on EMI, and feel virtuous about EV stickers—while the atmospheric chemistry of coal smoke continues to do the real damage.
Delhi does not need more virtue signalling on wheels. It needs honest science, regional pollution control, and the political courage to confront coal. Everything else is just smog with better branding.
The Profits Beneath the Surface
New car sales themselves are only part of the story. The real money in the automobile business lies in spare parts and after-sales service. While carmakers typically earn margins of 7–10% on new vehicles, margins on genuine spare parts can range from 15% to as high as 90%, driven by branding, distribution control, and limited competition.
India’s auto aftermarket is already booming, with turnover nearing ₹94,000 crore in FY24. Forced scrappage accelerates this ecosystem. New cars mean new service contracts, extended warranties, insurance tie-ins, and years of high-margin parts sales.
Old cars, by contrast, often rely on independent mechanics and non-OEM parts. Scrapping them eliminates a parallel economy that benefits consumers far more than manufacturers.
Seen this way, the policy is not merely about selling cars. It is about locking consumers into a controlled, high-margin ecosystem for decades.
A Circular Economy—for Whom?
Proponents describe this as a “circular economy”: old cars become raw material for new cars. Environmentally elegant, perhaps—but economically skewed.
Consumers surrender valuable assets at distressed prices. Manufacturers gain cheaper inputs and guaranteed demand. Scrap operators and digital intermediaries flourish. The state collects taxes on new sales. What part of this cycle protects the citizen’s wealth?
The language of sustainability masks a deeply asymmetric transaction.
Policing, Rent-Seeking, and Everyday Corruption
The enforcement model worsens the damage. Barricades, spot seizures, and discretionary checks have turned daily commuting into an exercise in anxiety. Where discretion exists, rent-seeking follows. Reports of harassment, selective enforcement, and “settlements” by local police and transport officials are hardly surprising.
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