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Taxing times |
New Delhi, March 16: Get ready to shell out up to Rs 70,000 more for your new car as auto makers gear up to pass the increase in excise duty, announced in the budget, to customers, despite gloomy sales in the sector.
“We are going to raise the prices of all our products and will pass on the entire additional excise duty. At present, we are working on the exact amount of the hike,” said Mayank Pareek, managing executive officer (marketing and sales) at Maruti Suzuki India.
The country’s second largest car maker Hyundai Motor India said the hike in excise duties would impact sales as disposable income of consumers would go down.
“This is not a positive step for the auto industry, which is already reeling under high interest rates,” said Arvind Saxena, director (marketing and sales), Hyundai Motor India.
Car sales had grown in single digits last year from 30 per cent increase in 2010. In January this year, sales were partly revived because of discounts by car makers, introduction of new models and higher demand for diesel models. Mukherjee today announced that excise duties for petrol cars with engines under 200cc and diesel cars with engine capacity under 1,500cc, but the length exceeding four metres have been increased to 24 per cent from 22 per cent.
Petrol and diesel driven vehicles with length exceeding four metres and engine capacity of over 1,200cc and 1,500cc, respectively, will now be charged with an ad valorem duty of 27 per cent, instead of the earlier 22 per cent, plus a fixed duty of Rs 15,000.
Automobile companies had been lobbying with the government to reduce excise duty on large cars to 16 per cent from the 22 per cent. They had also asked the government to remove the additional Rs 15,000 excise duty on cars with 1,500cc and above engines.
However, there was no excise applied on diesel cars, a move that auto makers have been lobbying against. “The industry is relieved that the finance minister did not take any retrograde step such as imposing a tax on diesel vehicles,” said Pawan Goenka, president of Mahindra & Mahindra.
Jnaneswar Sen, senior vice-president (sales and marketing) of Honda Siel Cars India, said prices of all locally produced cars would be raised. “In case of the small car Brio, it will be around Rs 7,000, while the same will be Rs 60,000 to Rs 70,000 for the luxury sedan Accord,” Sen said.
Luxury cars are going to get a tad more expensive as German auto giants Mercedes Benz and Audi plan to pass duty hike imposed in the budget to consumers.
“We are going to pass on the additional burden to customers. We have not decided the exact amount yet, but on an average it will vary between Rs 2 lakh and Rs 3 lakh,” said Suhas Kadlaskar, India director (corporate affairs and HR) of Mercedes Benz.
Expressing similar sentiments, Audi India said it might hike the prices of its products in the country.
“The increase in excise and customs duty on large cars in this budget is very surprising. This increase comes at a time when the Indian automotive industry was finding favour with customers looking for better and efficient cars,” Audi India head Michael Perschke said.
The budget has also hiked basic customs duty to 75 per cent from 60 per cent for fully imported vehicle such as Buggati and Ferrari.
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