The government’s car scrapping plan is facing challenges, as experts demand more clarity, car manufacturers oppose 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 scrapping 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 scrapping 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 in this regard. The head of the association believes that the cost of car scrapping is more than 1% and should be paid directly to the scrapping centers.
Domestic car manufacturers believe that car scrappage is not one of their duties and the new car is not supposed to subsidize the used car
“Considering that every four cars need a scrapping 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 production stoppage, 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 scrapping, 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.
