Ashok Leyland targets opening 3-4 vehicle scrappage centres in a year under franchisee model

As Chennai-based Ashok Leyland prepares to launch its first vehicle scrappage facility in Tamil Nadu under a franchise model, the company aims to expand the network to three or four centres within a year.

The company's Managing Director and CEO Shenu Agarwal said that they had decided a location for the first centre, which would be in Tamil Nadu itself, and were working on other locations as well. “We hope that in the next twelve months, we should be able to set up three to four centres on a franchisee model,” speaking on the sidelines of an industry event on Tuesday. The franchisee will operate under Re.AL initiative. 

Further elaborating on the franchisee model that the firm will adopt for vehicle scrappage centres, Agarwal noted, “We will provide the necessary know-how and expertise on setting up and managing the scrapping centres, but the day-to-day operations will be handled by our franchisee partners, who will also bear the investment costs.”

Meanwhile, Ashok Leyland's rival Tata Motors currently has five registered vehicle scrappage facilities under the Re.Wi.Re initiative and plans to roll out several more in the next few months. With an annual vehicle scrappage capacity of 72,000 units, Tata Motors has reported scrapping of more than 4,000 vehicles in FY24. 

The Indian government is urging the automotive industry to phase out old, unfit vehicles, as part of a broader initiative to reduce pollution, improve road safety, and revitalize the sector. Under the policy, passenger vehicles older than 20 years and commercial vehicles over 15 years must pass a fitness test or face mandatory scrapping. The policy also offers incentives, such as discounts on new vehicles to encourage compliance and promote the growth of a formal vehicle recycling industry, aimed at reducing waste and generating employment.