INDIA VEHICLE SCRAPPING MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

India Vehicle Scrapping Market Size and Trends

India Vehicle Scrapping Market is estimated to be valued at USD 8.9 Mn in 2024 and is expected to reach USD 38.4 Mn by 2031, growing at a compound annual growth rate (CAGR) of 23.2% from 2024 to 2031.

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The vehicle scrapping market in India is expected to witness significant growth during the forecast period. With the Government of India pushing to scrap unfit vehicles older than 20 years under the recently launched Voluntary Vehicle Fleet Modernisation Programme, the market is poised to grow manifold. As more fleet owners such as bus and truck operators opt for vehicle replacement over continued use of old vehicles, it will drive a surge in demand for vehicle scrapping services in the coming years. Moreover, with rising awareness about environmental protection and stringent emission norms, vehicle owners are likely to replace old polluting vehicles with new models, thereby propelling the scrapping market in India. 

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Insights, By Material, Availability of Scrap Steel Drives Growth

By Material, Steel contributes the highest share 44.5% market share in 2024 owing to its abundant availability from scrap vehicles. Steel has been the dominant material used in automotive manufacturing due to its high strength-to-weight ratio and affordability. On an average, a decommissioned vehicle contains between 60-70% of recyclable steel which can be extracted and processed. This huge source of scrap steel directly feeds into the recycling ecosystem. Steel scrap yards find it convenient to collect, sort and process bulk quantities of ferrous scrap.

Insights, By Vehicle Type, Used Vehicles Drive the Passenger Vehicle Segment

By Vehicle Type, Passenger Vehicles contributes the highest share of 41.3% market share owing to the large share of used private vehicles. As personal mobility rises alongside economic growth and urbanization, the passenger vehicle parc has been rising consistently over the past decades. This exponential increase in the number of vehicles on road eventually leads to a proportionate rise in obsolete passenger cars after completing their lifecycle. Scrapping such end-of-life vehicles provides a good source of components and steel for the recycling industry.

Insights, By Application, Component Reuse Boosts the Reusable Parts Application

By Application, Reusable Parts is expected to contribute the highest share of 54.3% market share in 2024 owing to the practice of refurbishing viable components. Though an older vehicle reaches the end of its life components such as engines, transmission, and alternators are still left with functionality. Scrapping facilities efficiently segregate such reusable parts through inspection and testing. These salvaged parts are then reconditioned or re-manufactured to desired quality standards. The refurbished components are competitively priced, increasing their demand from mechanic workshops and retail components buyers.

Market Concentration and Competitive Landscape

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Top Strategies Followed by India Vehicle Scrapping Market Players

• Established Players: Leading companies heavily invest in research and development to introduce technologically advanced and innovative products. For example, Maruti Suzuki invests over 3% of its annual revenues in R&D to develop efficient and eco-friendly vehicles.
• Mid-Level Players: Mid-sized players aim to deliver high-quality yet affordable products and services targeting the price-sensitive segments. They competitively price their offerings while maintaining decent profit margins.
• Small-Scale Players: Small players focus on specific market niches neglected by bigger players. For example, some cater to customized demands of certain industries or geographical areas not addressed by others.

Emerging Startups in the India Vehicle Scrapping Market

• Innovative Technologies: Startups like Cero develop IoT-based solutions leveraging AI and cloud to remotely monitor fleet performance. Automovill implements blockchain to securely track vehicle documentation and scrap processing.
• Sustainable Solutions: Startup Tolexo manufactures vehicle parts from recycled aluminum and steel scrap. Chennai-based Lohia Auto aims to set up battery recycling facilities to promote sustainability.
• Niche Markets: Some startups tap underserved rural markets and customize offerings for budget-conscious customers. A few have also emerged as aggregators to facilitate scrap disposal for individuals and SMEs.

India Vehicle Scrapping Industry News

• In September 2024, Union Minister Nitin Gadkari urged automobile manufacturers to establish vehicle scrapping centers, highlighting that such initiatives could boost vehicle sales by 18-20%.
• In October 2024, Maruti Suzuki Toyotsu India (MSTI), opened a registered vehicle scrapping facility in Noida, Uttar Pradesh. This facility employs eco-friendly processes to dismantle end-of-life vehicles, contributing to the formalization of the scrapping industry.
• In January 2023, CERO, a joint venture between Mahindra Accelo and MSTC Ltd., announced plans to expand its recycling facilities to 100 cities by 2025, aiming to enhance sustainable vehicle recycling practices across India.
• In April 2023, Tata Motors inaugurated a registered vehicle scrapping facility in Bhubaneswar, Odisha. This state-of-the-art center is designed to dismantle 10,000 end-of-life vehicles annually using environmentally friendly processes.

Key Takeaways from Analyst

• The vehicle scrapping market in India is set for significant growth over the next decade. The mandatory scrap policy recently implemented by the central government will be a major driver as it will incentivize owners to scrap old, unfit vehicles in lieu of newer models or scrapping certificates. This will increase the volume of ELVs entering authorized scrapping centers on a regular basis. Other factors like rising vehicle ownership, growth in fleet operations, and expansion of organized auto dismantling centers will also support the market expansion.
• However, inadequate infrastructure in terms of number and quality of authorized scrapping centers remains a key challenge. As of now, there are less than 40 such facilities across India. Financing options for vehicle owners to purchase new vehicles in lieu of scrapping certificates can also be improved. Regional variations may arise as northern and western states like Delhi, Haryana, Gujarat and Maharashtra have a higher number of aging commercial vehicles and may see faster growth rates. Other emerging clusters could be in industrial towns in Southern and Eastern parts of the country.
• Opportunities lie in setting up more modern scrapping facilities that adhere to environmental and safety standards. Investments in automation, materials recovery, and recycling technology upgrades can boost scrap volumes and maximize value recovery per vehicle.

Market Report Scope

Market Dynamics

Market Driver - Improvement in Road Infrastructure

As India aims to become a five trillion economy by 2025, extensive efforts are being put by the government to boost infrastructure development across the country. Emphasis is being given to build modern highways, expressways and roads which can support the growing vehicular traffic. In the last few years, around 30 km of roads were being constructed daily in India. The government had set a target of building over 34,800 km of National Highways by 2022 intending to connect different parts of the country. A well maintained and developed road infrastructure is enabling higher utilization of vehicles. With wider and smoother roads coming up, vehicle owners are able to cover longer distances during daily commutes with less repairs and maintenance. This increased usage is shortening the lifespan of existing older vehicles.

Market Challenge - Lack of Scrapyards and Dismantling Centers

India vehicle scrapping market faces a major challenge due to the lack of infrastructure required to support large scale vehicle scrapping. While the government has now made it mandatory for commercial vehicles over 15 years and passenger vehicles over 20 years to undergo fitness tests to get renewed registrations, the country lacks adequate scrapping yards and dismantling centers to handle this volume of scrapped vehicles. With an estimated five million commercial vehicles and another one million passenger vehicles reaching their end of life annually, setting up proper scrapping centers across major cities and automotive hubs will require large investments. This could potentially hamper the smooth implementation of the scrapping policy in initial years as infrastructure is slowly developed.

Market Opportunity- Growing Demand for Recycled Automotive Components

One of the key opportunities for players in India vehicle scrapping market is the growing demand for recycled automotive components. As thousands of old vehicles get decommissioned and dismantled at authorized centers every year, there will be a sizable supply of reusable parts such as engines, transmission components, steel sheets, aluminum parts and electric vehicle batteries. Many of these components can be remanufactured and remarketed at lower costs compared to new parts. The automotive aftermarket which sees demand for replacement parts is increasingly embracing recycled components. Both independent garages and automotive workshops will source such parts for repairing older vehicles.

Market Segmentation

•  Material Insights (Revenue, USD Mn, 2019 - 2031)
• • Steel
  • Aluminum
  • sCopper
  • Others
•  Vehicle Type Insights (Revenue, USD Mn, 2019 - 2031)
• • Passenger Vehicles
  • Commercial Vehicles
• Application Insights (Revenue, USD Mn, 2019 - 2031)
• • New Products
  • Reusable Parts
• Key Players Insights
  • Maruti Suzuki Toyotsu India (MSTI)
  • CERO Recycling
  • Tata Motors Re.Wi.Re
  • Kaiho Sangyo Co. Ltd
  • Mjunction Services Ltd
  • Go Green ELV Handlers
  • Goodvalue Auto Scrap Pvt Ltd
  • Goenka Motors Pvt Ltd
  • KD Ecosystem
  • Mahindra MSTC Recycling Pvt Ltd
  • SRI NEELAYUM PRECOATED STEEL