Scrappage of Old Cars Increases

EghtesadOnline: The number of vehicles scrapped in the fiscal 2021-22 has exceeded 30,000 vehicles and according to an official, the number of cars scrapped in the second half of the current fiscal year (ending March 20) is higher year-on-year.

News ID: ۷۸۷۷۹۱

03 April 2022

“Unfortunately, the non-implementation of laws and regulations for scrapping used cars in recent years has idled scrappage centers, but with the follow-up of the new Transportation and Fuel Department’s CEO, the scrappage process improved in the second half,” secretary of the Association of Scrappage and Recycling Centers said.

“A total of 34,000 worn-out cars were scrapped in the current fiscal year [ending March 20], which shows a significant rise compared to the scrappage of 7,000 old cars in the fiscal 2020-21,” Amir Ahmadi was also quoted as saying by Khabar Khodro.

The official announced that a new plan for scrapping old cars has been submitted to Iran Energy Exchange (IRENEX), which has been approved by the ministries of oil and economy, IRENEX and Majlis Industries and Mines Commission.

“We hope that with the approval of the first vice president, it will be implemented and we would see the scrappage industry flourish next year,” he said.

Asked if the association had a plan to scrap other types of vehicles, Ahmadi said all vehicles with an internal combustion engine are included in the scrappage system, but currently the plan includes trucks with up to three years of operation, motorcycles and passenger vehicles.

“With the import of 70,000 vehicles next year, about 200,000 vehicles will be scrapped and we will see a significant growth in the scrappage industry,” he said.

Commission Approves Proposal to Import 70,000 Cars

The number of imported cars, which has been discussed intermittently by the Majlis Joint Commission as part of the fiscal 2022-23 budget bill, has been ratcheted up to 70,000.

This issue has now been referred to the parliament for the final ratification.

According to the latest resolution of this commission, the proposal to import 70,000 cars, which was announced two weeks ago, has been approved and added to the budget bill, the news portal of Car.ir reported.

Mohammad Reza Mirtajeddini, chairman of the Targeted Subsidies Committee of the commission, commented on the imported items in the supplementary Note 7 and said, “Imported items will include 50,000 passenger cars and 20,000 hybrid and electric cars, 10,000 trucks, trailers, refrigerated trucks and vehicle pullers, as well as 10,000 suburban and inner-city buses.”

3 Car Scrappage Plans Approved

Three car scrappage plans have been approved by the parliament, which will hopefully be implemented, secretary of the Association of Scrappage and Recycling Centers said.

“For the past six years, the issue of worn-out cars was neglected and car scrappage centers in the country remained idle and are operating at 10% of their capacity. We had proposed many plans to the previous government, but unfortunately none of them was implemented,” Ahmadi was also quoted as saying by the Persian daily Etemad.

“In the fiscal 2014-15, about 320,000 cars were scrapped, which was a golden year for car scrappage centers. But after that, six years of investments in this sector were completely ruined.”

According to the official, total investments in the field of car scrappage amounted to 200 trillion rials ($739.64 million).

Transportation and automotive experts believe that the excessive wear and tear of the current freight and passenger fleet give rise to many problems, especially in terms of safety, air pollution and fuel consumption.

Nevertheless, consecutive governments have failed to overhaul the country’s dilapidated road fleet through scrappage and replacement schemes, due to lack of funds for supporting vehicle owners and automakers.

Rules for Car Scrappage

Currently, the only scheme to keep scrappage centers working since fiscal 2018-19 pertained to motorcycles, such that by numbering a new motorcycle, an obsolete motorcycle is scrapped.

"Last year, 8,000 obsolete cars were scrapped, while in the fiscal 2014-15, this figure reached 320,000 cars. While worn-out cars are not being scrapped at present, automakers are still providing statistics on production growth, saying they plan to produce 1.2 million cars,” Ahmadi said.

"One of the important issues that does not put any pressure on carmakers is the issue of car replacement and can be a way to support domestic carmakers."

A major problem is that the owners of obsolete cars have no quota in car lotteries and no concession is considered for them to replace their cars easily.

“The only hope that currently exists is the issue of importing 50,000 cars. We believe that with the import of these vehicles, 200,000 obsolete cars could possibly be scrapped,” the official said.