Renault India CEO: Government should scrap old cars

Renault India CEO Sumit Sawhney has asked the Indian government to scrap old cars to make way for new ones. He wants India to follow in China’s footsteps by having a car scrappage policy. In his view, this would inject demand for new cars.

Here’s what Mr. Sawhney said in an interview to MoneyControl,

When we are driving a car, there are three more mirrors apart from the wind screen. Two on the side and one rear. You need to see backwards as well. You need to scrap old cars. Imagine, today, you have 40 million cars of which 15 million were added after 2000. You can scrap today 15 to 20 million cars. Even if you start with five to 10 percent that will be one million. If you scrap it, it will inject fresh demand. Indian automotive industry, today, is at 3.3 million (volume per year sold). If you scrap it (old vehicles), it will inject fresh demand. That’s how China has grown. China today is 28 million market.

Currently, India has no car-scrappage policy. For now, the  government is working with various stakeholders to evolve a scrappage policy for commercial vehicles older than 15 years.There’s still no clarity about whether a scrappage policy would come into effect for personal cars as well.

This said, some parts of India, after an NGT (National Green Tribunal ruling), have already banned 10-15 year old cars. In the NCR, all diesel vehicles that are over 10 years old can no longer ply on roads there as their registrations will not be renewed. Similarly, the registration of petrol vehicles that are over 15 years of age will not be renewed in the NCR.

By 2030, the Indian government wants only electric cars to be sold here. The fate of cars with internal combustion (petrol, diesel, LPG and CNG) engines remains hanging in balance. According to the Renault CEO, the government’s target of electrifying all of India’s cars by 2030 is not impossible.

He’s also of the view that cars with internal combustion engines will continue to operate until 2030, and even beyond. Mr. Sawhney’s views are similar to most senior executives of the automotive industry in India, who think that going all-electric by 2030 is very difficult, if not impossible.