– Scrappage policies mandate phasing out older, polluting vehicles. – Aim to promote cleaner mobility and reduce emissions while boosting new vehicle demand.
Positive Impact on Auto Sector Stocks
– Increased Demand: Replacement of old vehicles drives sales of new models. – Focus on Cleaner Vehicles: Boosts EV and BS-VI compliant vehicle adoption.
Beneficiaries of Scrappage Policies
– Automakers: Tata Motors, Maruti Suzuki, and Mahindra & Mahindra benefit from increased sales. Auto Ancillaries: Companies like Bharat Forge and Sundaram-Clayton see demand for parts.
Challenges for the Auto Industry
– Initial Costs: Investment in scrappage infrastructure and compliance upgrades. – Consumer Hesitation: Reluctance to scrap old vehicles without sufficient incentives.
Long-Term Outlook for Investors
– Automakers focusing on affordable and eco-friendly vehicles stand to benefit. – Ancillary companies and recyclers offer promising long-term investment potential.