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Systematic Approach to Estimate Vehicle Cost at End-of-Life and Different Time Intervals
F2018/F2018-STN-027

Authors

Maniraj Karikalan
General Motors Technical Centre India Pvt Ltd

Athiyaman Eswaran, Shreenath Krishnaswamy Raman

Abstract

As per Automotive Recyclers Association, “Automobiles are among the most recycled commodities in the marketplace and as of 2015 the professional automotive recycling industry recycles over 4 million motor vehicles annually in the U.S. and Canada alone” (1). Government of India under the Ministry of Road Transport & Highways has proposed a scrapping policy or end of life policy that will provide incentives to the owner for surrendering an old polluting vehicle. This policy initiative is likely to open new avenues for Scrap Recycling in India. The government’s proposed policy may push over 28 million units of decade-old polluting vehicles off the roads. It could generate steel scrap worth Rs 115 billion annually. Union Minister Nitin Gadkari said it will boost the automobile industry turnover over 4 times to Rs 20,000 billion in the next five years from present 4500 billion rupees as per Scrap Recycling Conference held on Sept’2016 (2). Apart from catering to customer needs, market trends and meeting safety standards, OEMs have the responsibility to lessen the impact on environment by reducing waste at the end of Product lifecycle. Also when the vehicle is ready to be scrapped, the lack of information from service history might lead to difficulty in differentiating reusable parts from recyclable parts. Also based on the study “Analysis of End of Life Vehicles (ELVs) Sector in India” (3), it is observed that more than recycling, sustainability of recycling industry is a function of reuse. Indeed, up to 70% of a vehicle can be dismantled, and most of its spare parts can be re-used. From the perspective of the waste management hierarchy, which frames reuse as a superior practice to recycling in terms of material efficiency, this is a very desirable situation. During purchase of a new vehicle, the recoverable cost at the end of life could become one of the critical factors influencing the buying decision of a customer. And in the course of a vehicle’s lifetime, in most cases the ownership is transferred multiple times, before it gets disposed as scrap. During these transactions of ownership transfer, there is no defined procedure to evaluate the vehicle cost after depreciation due to time and usage. The current practice used by dealers to estimate Resale value during the time of exchange for buying a new vehicle is based on experience and negotiation of the dealer. The primary objective of the study focusses on defining a methodology to estimate a parameter indicating the minimum recoverable cost at the end of lifecycle and during transfer of ownerships. This study also provides a clear guidance for the customer in deciding whether to retain or sell the vehicle by comparing the depreciating recoverable cost of vehicle with the total operating and maintenance cost that the customer would spend over a year, thereby making the customers more beneficial

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