An automotive expert believes that most of the problems facing the vehicle scrappage plan can be solved, if the Department of Environment were to accept the equalization table.
The old vehicle scrappage plan was launched to alleviate air pollution, reduce fuel consumption and renovate the domestic automotive fleet.
However, the plan lost momentum following the parliamentary ratification that mandated the registration of a heavy vehicle against the same type that is scrapped. Consequently, the Department of Environment also insists on the same requisite for accepting the vehicle scrappage certificate.
“The scrapping centers have enough certificates for passenger cars and if the Department of Environment agrees with the equalization table, they can meet the needs of car manufacturers,” Jalal Amini-Fard, a member of the Board of Directors of the Isfahan Scrapping Centers Association, was quoted as saying by Donyaye Khodro.
"The Department of Environment has announced that diesel cars should be scrapped for the registration of diesel cars and gasoline cars for gasoline cars. If this restriction is removed with the equalization table, the problem of companies like Bahman Diesel will be solved. This issue has also been announced to Hossein Khezri, the CEO of Bahman Diesel, who has written a letter to the Department of Environment so that the condition of the type of fuel for scrapping could be eliminated,” he added.
The expert noted that the equalization table was considered for alleviating the shortage of scraps in heavy or light vehicle sectors.
“Currently, the Department of Environment opposes this table and only accepts the scrap certificate of each segment for the same vehicle, which we consider an obstacle. As a result, we are facing a shortage of scrap certificates in the commercial and heavy vehicle sectors, but we can provide this certificate issued for cars if the department accepts the table of equivalence," he said.
"The parliament has proposed that the cost of scrappage should be 1.5% of diesel cars, in which case no one will be willing to participate in the scrappage of heavy vehicles."
Amini-Fard said passenger vehicle scrap certificate is available and if the equalization table is implemented, it will be applicable for both diesel and gasoline vehicles.
Automakers Object to Mandatory Participation in Car Scrappage Plan
The government’s car scrappage plan is facing challenges, as experts demand more clarity, car manufacturers refuse to accept their obligations and car owners remain mystified.
The government wants to get rid of millions of dilapidated cars that consume a lot of fuel and produce a great deal of pollution. But according to experts, the age and pricing of cars liable for scrappage are unclear, Donyaye Khodro reported.
Scrap cars refer to a motor vehicle purchased primarily as scrap, for its reuse or recycling.
Car manufacturers are fundamentally against participating in the scrappage of used cars. In a letter sent by Secretary of the Automobile Manufacturers Association Ahmad Nemat-Bakhsh to the Majlis Industries Commission, he referred to the Organizing Automobile Industry Law and stated that “car scrappage is not one of the duties of automobile manufacturers and the new car is not supposed to subsidize the used car”.
The letter mentions the experiences of other countries that have increased the cost of maintenance, taxes and insurance of used cars, which compels the owners of these cars to replace or scrap them, not the car manufacturer.
It noted that the age of used cars is also under dispute, for which there is no specific criterion and definition. It also objected over the fivefold rise in the price of scrap certificate and the long process of getting this certificate.
In the letter, which has been signed by car manufacturers, it has called on obliging owners of used cars to deposit 1% of the total price of each car to the account of the Department of Environment to receive bank facilities or grants.
This is while the Association of Scrapping Centers of Iran has a different opinion. The head of the association believes that the cost of car scrappage is more than 1% and should be paid directly to the scrapping centers.
“Considering that every four cars need a scrap certificate, this figure should be 3-4% of the government price of cars. We believe 64 million rials, which is about 4% of a domestic car’s price, are reasonable,” Mahmoud Mashhadi-Sharif added.
The official said this figure is not precise and should be based on the prices of used cars.
“Calculating this figure is not difficult. The average price of used cars in the market from the last one to two months should be determined and the price of the scrap car should be obtained based on the rates of metal smelting companies. And the difference between the two figures should be the price of the certificate,” he said.
“If the average price of a used car is around 250-270 million rials, the price of a scrap car is around 60-70 million rials, the difference between the two is approximately 190-200 million rials. Therefore, the scrap certificate should be priced around this figure.”
Mashhadi-Sharif said the average government price of cars should be determined by the experts of the judiciary, the Ministry of Industries, Mining and Trade, and the trade union.
“We are against scuttling production, but we are also strongly against the 1% price of a scrap certificate,” he added.
By sending a bill to Majlis, the Ministry of Industries, Mining and Trade has demanded the amendment of the "Organizing Automotive Industry Law" pertaining to car scrappage.
According to the Industries Minister Reza Fatemi-Amin, in this law, production is connected to scrappage, which is a flaw, because according to this law if there is no car for scrapping, production should stop.
According to the bill, if the ministry determines that there is a problem with the supply and demand of scrap certificates, 1% of the value of used car should be deposited into the account of the Department of Environment and this department should give it as a profit or subsidy to people who scrap cars and motorcycles.
Car scrappage became a controversial topic when the government announced the final regulations regarding car imports. Even the import of foreign economy cars is not expected to encourage owners to agree to scrap their old cars as they are way beyond the means of most people.
Iran’s two major state-owned automakers, which produce relatively cheaper cars, are unable to meet domestic demand. Hence, they cannot be expected to join the scrappage plan by helping replace the dilapidated cars.
