Blog: Vehicle Scrapping : Time to copy M&M ?

Saturday, 10 April 2021

Vehicle Scrapping : Time to copy M&M ?

By end of 2022, I believe M&M will have built-up capacity to scrap 25 lakh vehicles

But, by that time, 400 lakh ( old ) vehicles will be ready to be scrapped !

I suppose, most other auto manufacturers will need to copy M&M strategy described in following news report :

Mahindra offers customers a vehicle scrapping solution

Extract :

Mahindra and Mahindra (M&M) has tied up with Mahindra MSTC Recycling Private Limited (MMRPL) to offer its customers an end-to-end solution for the scrapping of vehicles.

MMRPL is engaged in the business of acquiring used/end-of-life vehicles to dismantle and scrap them under the brand name of Cero.

This agreement with MMRPL will enable customers to get a hassle-free and transparent deal under one roof.

Any customer intending to purchase a new Mahindra vehicle by scrapping/exchanging the old vehicle which is more than 15 years, can do so at any Mahindra dealership.

While the service prevents customers from hunting for a vehicle scrapping agency/dealer, it also aims to align with the Govt’s intent to create an eco-system that eliminates old and polluting vehicles.

On the initiative, Sumit Issar, MD, Mahindra Intertrade

[ issar.sumit@mahindra.com ] said ,

“Cero is India’s first authorised recycler for motor vehicles. While we have dismantling centres at Greater Noida, Pune, and Chennai, the collection centres are at major cities such as Mumbai, Bangalore, Hyderabad, Ahmedabad, Jaipur, and Chandigarh.

Furthermore, Cero has plans to have a presence in 25 cities within the next 10 months. The arrangement with M&M is going to strengthen this reach and benefit all Mahindra vehicle customers who are looking for solutions for scrapping their old vehicles.”

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MY TAKE :

Between them, the major car manufacturers ( Maruti Suzuki – Hyundai – Honda – Tata – Toyota – Ford etc ), have approx. 4,900 car dealers located in 523 cities

It is quite possible that they too realize that the biggest hassle for a person wanting to scrap his old car, will be to ,

Ø Find a SCRAPPING CENTRE ( there are practically none at present in entire country )

Ø Take his vehicle to such a Centre ( possibly located several hundred Km away )

Ø Get old car “ valued “ for its scrap value ( no bargaining – simply left to the mercy of the Centre )

Ø In the absence of option of getting “ Scrap Value “ estimates from several parties, agree to whatever is offered by that SCRAP CENTRE

But imagine, if I can take my old jalopy to car-dealers of all the car manufacturers mentioned above ( all located within 2 Km of one another ) and obtain 6 “ Comparative Estimates “, then I could take the best ( bargained ) offer for that NEW car which I wish to buy

There is every possibility that this realization ( of being able to motivate a customer by offering to take-over his old vehicle in exchange for a new buy ), would prompt ALL car manufacturers to copy M&M strategy !

I believe, some of the competitors ( of M&M ) will :

Ø Set up a portal where an old car owner can get a tentative “ Scrap Value Estimate “ by submitting full details of his car

Ø Offer to send a “ Human Estimator “ to the residence of such a “ Registered Potential Buyer of New Car “, to close the deal

I have no doubt M&M executives have taken into account such a counter-move from competitors

Till such time competitors decide – and set up – their own SCRAPPING PLANTS, they may still come forward and implement what I mentioned above

They may simply act as “ Collection Centers “ and hand over the old / collected cars, to some ( non-aligned / non-captive ) “ Scrapping Centres “

But who knows, in order to build up business for its own 25 “ Scrapping Plants “, Cero may even accept old cars collected by dealers of its competitors ( at least for first 2 years ) !

How will M&M address the issue of Shri Gadkariji’s “ request “ that car manufacturers give a discount of 5 % on the price of a new car, to new car buyers who bring / handover, a SCRAP CERTIFICATE ?

No big deal !

Here is how that “ deal “ will work :

While handing over the old car, the customer wants to buy a M&M Scorpio ( priced @ Rs 10 lakhs )

5 % = Rs 50,000

Dealer says :

Ø Your old car Scrap Value is Rs 100,000

Ø If you do NOT want to buy any NEW car from me, I give you only Rs 50,000 , as scrap value

Ø But, if you buy a Scorpio, I give you :

# Rs 50,000 as Scrap Value , AND

# Rs 50,000 as discount

This is only a TRAILER

Let us see how the FULL FILM unfolds