Ahead of the festive season, several passenger and commercial vehicle manufacturers have agreed to offer discounts of 1.5-3 per cent on new vehicle purchase against scrapped old vehicles after a meeting with Union Minister Nitin Gadkari, an official statement said on Tuesday.

The statement further said Mercedes Benz India has offered a flat discount of Rs 25,000, which will be over and above all existing discounts.

Union Road Transport and Highways (RT&H) Minister Nitin Gadkari on Tuesday chaired a meeting with the SIAM delegation at Bharat Mandapam, where he addressed pressing issues in the automobile industry.

"During this interaction, responding positively to the advice of the minister RT&H and recognising the importance of Fleet Modernisation and Circular Economy, multiple Commercial Vehicle Manufacturers and multiple passenger vehicle manufacturers have agreed to offer discounts for a limited period against a certificate of deposit (Scrappage Certificate)," the statement said.

It said commercial vehicle manufacturers are willing to offer discounts for a limited period of two years and passenger vehicle manufacturers are willing to offer discounts for a limited period of one year.

The statement noted that these discounts will further incentivise the scrapping of vehicles, thereby ensuring the plying of safer, cleaner and more efficient vehicles on roads.

As per the statement, passenger vehicle manufacturers namely Maruti Suzuki India Ltd, Tata Motors, Mahindra & Mahindra, Hyundai Motor India, Kia Motors, Toyota Kirloskar Motor , Honda Cars, JSW MG Motor, Renault India, Nissan India and Skoda Volkswagen India, will offer discount of 1.5 per cent of the ex-showroom price of new car or Rs 20,000, whichever is less, against the passenger vehicle scrapped by the owner in the last 6 months.

"Details of the scrapped vehicle to be linked in the Vahan system," the statement said, adding companies may voluntarily offer additional discounts on identified models.

The statement pointed out that individual passenger vehicle manufacturer may have the liberty to extend this discount only on the identified models, within their vehicle portfolio.

"As the car is not getting exchanged but only scrapped, hence between exchange and scrap discount, only scrappage discount will be applicable, " it said.

According to the statement, commercial vehicle manufacturers namely Tata Motors, Volvo Eicher Commercial Vehicles, Ashok Leyland, Mahindra & Mahindra, Force Motors , Isuzu Motors and SML Isuzu, will offer discount equivalent to 3 per cent of the ex-showroom price for a commercial cargo vehicle of more than 3.5 tonne.

"Discount to be offered to a person buying a vehicle against a Traded Certificate of Deposit of a scrapped commercial vehicle would be equivalent to 2.75 per cent of the ex-showroom price for scrapping a commercial cargo vehicle with more than 3.5 tonne GVW (gross vehicle weight)," it said.

The statement said this scheme may also be considered for buses and vans.

According to sources, the meeting was attended by top officials of the automobile industry, including SIAM President Vinod Aggarwal, Maruti Suzuki India MD & CEO Hisashi Takeuchi, Tata Motors Executive Director Girish Wagh; Ashok Leyland Managing Director & CEO Shenu Agarwal and TVS Motor Co CEO KN Radhakrishnan, among others.

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