Tata Motors to build vehicle scrapyards in Mumbai, Howrah, Hyderabad and Karnal

The business opportunity comes as India’s new vehicle scrapping policy mandates scrapping of commercial vehicles after 15 years if they fail to meet emission criteria. This is likely to also open up avenues for car sales for manufacturers. (Image Source: Shutterstock)

Tata Motors will collaborate its dealers to build vehicle scrapyards in Greater Mumbai, Howrah, Hyderabad and Karnal as part of its focus on emerging business opportunities, two sources told Mint.

These four collaborations will likely not see direct investment by Tata Motors, but the company will provide technical know-how and expertise for vehicle dismantling units, the sources said, adding that dealers will have to scope for investors themselves.

Moneycontrol could not independently verify the report.

The sources added that Tata Motors will start with these four units but may expand the scrapping business later. The move is being viewed as another revenue stream for dealers, they added.

Tata may extends the collaborations may to public sector enterprises in the coming months, “but initially they may choose to go on their own,” the source said, adding the “crucial factor is financial health of the dealers” as they have incurred losses and substantial decline in sales over the past years. “This investment, though, will be for the long term," this person added.

The business opportunity comes as India’s new vehicle scrapping policy mandates scrapping of commercial vehicles after 15 years if they fail to meet emission criteria. This is likely to also open up avenues for car sales for manufacturers.

The second source pointed out that vehicle scrapping is expected to “thrive” in the coming years and automakers are interested, so the “potential is huge.”

“Most automakers are expected to tie up with some other company to get the technology involved in the scrapping of vehicles. Tata Motors, being the biggest commercial vehicle manufacturer, is definitely going to benefit from this policy in the years to come," they added.

A Tata Motors spokesperson did not respond to queries, the report said.