Effect of Union Budget 2013 - 2014 on Indian Auto Sector

[Gurrala74]

+1 Raja,

Especially after MnM and TATA SUV launches we have seen some good interest coming out from the middle class section to own an SUV(it was always seen as a richman's terrritory earlier), but it seems the same is getting killed with this move and now again people will settle back into the cramped below 4 meter segment once again.

 

[mukesh]

Your Favourite SUV gets Costlier (See below for some of the SUVs)
A hike in tax on sport utility vehicles (SUVs) in India has taken automobile companies by surprise. Given that the segment is one of the bright spots in the country's automotive market, which is heading into decade-low sales, automakers may have no choice but to pass on the costs to consumers.

"TKM (Toyota Kirloskar Motors) will pass on the entire burden to consumers. The excise hike will affect our multi-utility vehicle Innova and SUV Fortuner, while the hike in customs duty will make our Land Cruiser and Prado costlier," Sandeep Singh, TKM deputy managing director and COO (marketing and commercial), said.

"This is not a good Budget for the automobile industry. With duty hikes, all manufacturers will pass on the burden to consumers and this will further dampen the ongoing sluggish sales," he added.

Sales of utility vehicles in India rose 57 per cent in the nine months to December, against a 2 per cent fall in car sales.

Mr Chidambaram's Budget for fiscal 2013-14 has proposed a hike in the duty paid by the manufacturers of the vehicles to 30 per cent from 27 per cent, but does not include a reduction in excise on small cars.

"SUVs occupy greater road and parking space and ought to bear a higher tax," the Finance Minister said in Parliament in his Budget speech.

High interest rates and rising fuel costs combined with sluggish economic growth in Asia's third-largest economy have slammed the brakes on India's car industry, once one of the world's most promising growth markets.

"Given the growth in that sector, that's going to hit very hard," Lowell Paddock, managing director of General Motors' Indian operations, adding, "It's going to affect a lot of different manufacturers here ... I was surprised by that."

What I guess I find frustrating is that there was not a recognition that the industry is currently in the doldrums," Mr Paddock said, adding that the specific details of the SUV duty hike would be important in determining its impact.

"No quarrel if all large cars are taxed... singling out SUVs destroys a level field. Sad that one has to fight harder to succeed in one's own country," tweeted a dismayed Anand Mahindra, chairman and managing director of Mahindra & Mahindra, the manufacturer of popular SUVs such as Scorpio and XUV 500.

Here's a look at how prices of SUVs and super cars will be affected should the companies decide to pass on the entire burden of the tax hike to consumers:

Toyota Innova -dearer by Rs. 30,000-50,000
Toyota Fortuner - dearer by Rs. 60,000-70,000
Toyota Prado - dearer by Rs. 10-12 lakh
Land Cruiser - dearer by around Rs. 15 lakh
Renault Duster - dearer by around Rs. 24,000
Mahindra XUV 500 - dearer by around Rs. 1 lakh
Mahindra Scorpio - dearer by around Rs. 22,000
Tata Safari Storme - dearer by around Rs. 35,000
Porsche 911 - dearer by Rs. 29-72 lakh
Aston Martin - dearer by Rs. 45 lakh - Rs. 1 crore

The basic customs duty on motorcycles with engine capacity of 800cc or more has also been increased from 60 per cent to 75 per cent. Here's how the price of superbikes will be affected:

Suzuki Hayabusa - Company says no price hike
Harley Davisdon - dearer by Rs. 1.5-1.75 lakh
With inputs from Reuters and PTI


Source NDTV Profit: http://profit.ndtv.com/budget/artic...nd-out-by-how-much-318825?pfrom=home-business

 

[D.J.D.]

Your Favourite SUV gets Costlier (See below for some of the SUVs)


Toyota Innova -dearer by Rs. 30,000-50,000
Toyota Fortuner - dearer by Rs. 60,000-70,000
Toyota Prado - dearer by Rs. 10-12 lakh
Land Cruiser - dearer by around Rs. 15 lakh
Renault Duster - dearer by around Rs. 24,000
Mahindra XUV 500 - dearer by around Rs. 1 lakh
Mahindra Scorpio - dearer by around Rs. 22,000
Tata Safari Storme - dearer by around Rs. 35,000
Porsche 911 - dearer by Rs. 29-72 lakh
Aston Martin - dearer by Rs. 45 lakh - Rs. 1 crore

How come duster appears in this list ? it has a tiny 1.5 L (1461CC) engine and as per our FM vehicle having engine capacity more than 1.5L (diesel) will be considered as large SUV.
What about XUV price? dearer by 1 lakh whereas increase in price for T-fort is only 60-70k.

 

[Gurrala74]

@Mukesh

Nice share buddy !!

Yes, I am too wondering why 1Lakh for XUV 500 , with that 3% increase it should be below 50k

 

[Raja]

How come duster appears in this list ? it has a tiny 1.5 L (1461CC) engine and as per our FM vehicle having engine capacity more than 1.5L (diesel) will be considered as large SUV.
What about XUV price? dearer by 1 lakh whereas increase in price for T-fort is only 60-70k.

Duster petrol is a 1.6 engine . Benefit for petrol engines is only for 1.2and < . Iam sure the increase is ony for petrol which is iam sure not many are buying at the first place .

Price hike of xuv , seems like a error no way the price can be increased in a magnitude of 1 lakhs

 

[S Class]

The worst hit will be JLR & Volvo as they have the maximum numbers of CBU's

Don't know about Volvo but JLR has started assembling cars near Pune.

And we did some calculations. For every 14L (ex-showroom) SUV, the price hike will be around 45k.

 

[EnfieldRyder]

The thing of taxing the SUVs with the parameters is creating a lot of confusion with many potential buyers. Some of the cars even though hatcbacks or MUVs are kind of coming under this hike bracket... I will wait and watch for things to clear before I can make any decision on which car to buy. I had an MUV & Hatch in my mind but I am not sure

 

[S Class]

Hatch won't be there, so relax. I called up few dealers, especially Tata & they said prices will go up for likes of Storme, but not for Manza, Vista etc.

 

[D.J.D.]

@ Raja

thank you for the clarification. you are right price increase will be for petrol duster. Regarding XUV price as you said it must be an error.

 

[sethumurugan]

Thats really crazy... and BTW, I was wondering how come some sedans is also classified into SUV [I think I saw sx4 in the list.]

 

[rohit0103]

So, both Ertiga and Duster are safe as of now. But, probably depends on variants, irrespective of shape of the vehicle.

The Dusters big-selling diesel variant,that competes with many of M&Ms products,did not see any hike in taxes as its engine (at 1,461cc) is marginally lower than the threshold of 1,500cc reserved for higher duty.Marutis sub 4-meter Ertiga UV also managed to stay out of the higher-tax bracket as it did not fall in the government definition of SUVs/UVs that attract higher duty.

ePaper Lite - Times of India Publications

 

[visran]

SIAM to request roll-back on SUV excise hike: Budget 2013

In an interview with PTI, Dr Pawan Goenka, President, M&M (Automotive and Farm Equipment Sectors), said, ”The higher excise duty on SUVs was totally uncalled for. This was the only segment which was showing some growth. We had a post Budget meeting of SIAM members and it was unanimously decided to ask the FM to reconsider the decision. Our concern is that among vehicles in the same price category, one may have to pay the higher excise duty and other may not.”

Apart from this, the Budget 2013 also states that import duty on completely built cars which cost over $40,000, have engine larger than 3000cc for petrol and 2500cc for diesel, will now attract 100% import duty, compared to the previous 75%. This will see the base models of applicable variants of Land Rover to be dearer by INR 15 lakhs, while that of Lamborhgini by INR 60 lakhs. SIAM will not be asking for a roll back on this, so the rich are once again punished to earn more.


Read more at SIAM to request roll-back on SUV excise hike: Budget 2013 | Rush Lane

 

[visran]

Praful Patel wants sops for commonly-used SUVs

Finance minister P Chidambaram's cabinet colleague, heavy industries minister Praful Patel has sought exemption for utility vehicles such as Mahindra Bolero and Tata Sumo from the 3% additional excise duty proposed in the Budget.

In a letter to the finance minister, Patel has said that the proposal to levy additional duty on sports utility vehicles has led to classification of utility vehicles commonly used in rural and semi-urban areas under this category.

Chidambaram had in his Budget speech proposed an increase in the excise duty on SUVs to 30% from 27%, reasoning that they occupy greater road and parking space.

"Needless to say neither are these vehicles high-end nor luxurious. In fact, they are a necessity and a compulsion for vehicle owners given the poor rural road network and their lower price band," Patel said in his letter to the finance minster.

The heavy industry ministry has noted that there is no specific definition of SUVs and all such vehicles that have an assessable value of up to 10 lakh should be exempted if imposition of the additional excise duty is entirely unavoidable on account of revenue and subsidised diesel prices.

Patel has also argued that in the light of the negative growth in the auto industry in the current year there is a case for complete withdrawal of the 3% additional excise duty.

According to the Society of Indian Automobile Manufacturers (SIAM), car sales in February saw the steepest monthly decline in 12 years. Car sales declined by 25.71% to 158,513 units, compared with 213,362 units in the year-ago period.

Patel in his letter noted that the auto sector accounts for 22% of manufacturing GDP and is one of the largest employers in the country. "Overall it is expected that the auto industry may have a flat or even negative growth for the current year, which shall be very discouraging and a big setback for achievement of targets set under the Auto Mission plan 2006-16," the minister noted.

The ministry wants the finance minister to announce that the 3% extra excise duty on SUVs will be removed next year given that the diesel rates are being progressively increased and will scale up to market pricing.

Praful Patel wants sops for commonly-used SUVs - The Economic Times

 

[rohit0103]

Government may clarify SUV tax to keep off sedans from 30% tax slab - The Economic Times

To clear the air over higher excise levied on sports utility vehicles (SUVs) in the recent budget, the government is trying to rectify the classification by introducing the concept of two-box vehicles that would remove the extra financial burden on some cars currently paying more tax.
Certain long cars normally referred as sedan have come under the SUV definition of the government and ended up paying higher taxes after the February 28 budget.

Maruti SX4, Toyota Corolla Altis and Honda Civic, along with some of other popular sedans, are being taxed at a higher 30% excise duty, even as most sedans continue paying the regular 27% tax. All such longish sedans are called three-box vehicles (due to an attached boot), while compact cars like hatchback and the utility vehicle range, including SUVs, are referred as two-box vehicles due to their different structural design

 

[Ravikiran]

Re: Monthly Discounts / Schemes on Indian Cars.

Hi Friends,

While discussing about skoda rapid, Dealer in Hyderabad was mentioning that Road tax may be hiked by 2-4% from 1st April. Can someone confirm if this is true.

Thanks,
Ravi Kiran G