Gov’t Scrappage Scheme Ends Up in Scrapyard

EghtesadOnline: The government of President Hassan Rouhani has put an end to the auto scrappage scheme. The plan was announced less than a month ago.

News ID: ۷۷۹۷۴۸

15 October 2017

According to a controversial government directive, local automotive companies were obliged to send one old car to the junkyard if they produced cars with fuel consumption over 8.5 liters per 100 kilometers.

On Wednesday the Cabinet released a letter saying, “The scrappage scheme introduced in August has been invalidated,” Asbe Bokhar reported. The local automotive website published a scanned copy of the official letter, according to Financial Tribune.

Earlier, Minister of Industries Mohammad Shariatmadari was quoted as saying that the scrappage “plan will have a major negative impact on the domestic market and lead to higher prices.”

He warned that the plan would “negatively affect both car buyers and dealers”. His predictions came true soon after the scheme was implemented on Sept. 17 and the Traffic Police stopped issuing license plates to eight vehicles namely Cherry Tiggo5, Arizo5, MVM X33, JAC S5, Lifan 820, Suzuki Grand Vitara, Haima S7 and BYD S6.

For each vehicle with fuel consumption over 8.5 liters per 100 kilometers, the auto company was required to pay the government 25 million rials ($650). Hypothetically the money was to be used for removing the dilapidated gas guzzlers from the roads.

Deputy chief of Traffic Police, Brigadier General Mousa Amiri says, “Until the amount is paid the vehicles will not get number plates.” However, with the car companies refusing to comply, car buyers got a raw deal and were compelled to bear the extra burden.

The vehicles were made/assembled by Iran Khodro, Modiran Vehicle Manufacturing, Kerman Khodro and Karmania.

The main aim of the scrappage scheme was reportedly to help reduce the worsening air pollution caused largely by the cars. However, its early death is sound of music for the automakers who could see the path cleared to continue their dodgy operations.