Excise Duty on Indian Cars

The impact of increased prices of the products is being assessed by some luxury automobile manufacturers such as Audi, BMW and Mercedes.  A fifteen percent rise would be seen in case of imported cars. Thus, the increase in the excise and customs duty on cars is definitely very surprising. This would surely affect the customers who are looking for efficient and better cars. The pricing strategy needs to be re-evaluated in India.

Many people may plan to bring a dream vehicle home. But this plan would be a little difficult owing to a stark price increase.  The Union budget has levied higher excise duty and this year it seems to be increasing hopelessly. The prices of the products are raised by immediate effect by Toyota Kirloskar Motor, General Motors and Tata Motors. However, this is unlike Hyundai Motor India Ltd and the Maruti Suzuki India Ltd. who have determined the quantum of increase to be passed to the customers. According to a spokesperson of MSIL, the quantum of increase is being evaluated.

Tata Motors

The increase in excise duty would not only lead to the increase in the product prices but will also lead to a rise in the prices of raw materials. Thus, the input costs will be quite higher.  The cumulative impact will be higher than two percent than the addition rate that was specified by the budget. However, it is indicated by the sources in the company that Maruti Suzuki would most likely put in place a price increase of approximately Rs 3000. The Alto is the bestseller of the company and the expected increase is about Rs 3000 to Rs 4000.  The price of Swift, a popular hatchback is likely to be increased by Rs 10,000.  The third generation swift that was introduced by Maruti Suzuki last year had its price somewhere between Rs 4, 37 lakhs and Rs 6.65 lakhs. There are also chances that the prices may be increased by HMIL.

Maruti Suzuki

The central excise duty on cars was increased by Pranab Mukherjee, the finance minister.  This increase was seen in case of cars whose engine capacity was less than 1,200 cc. There was a gaping ten to twelve percent increases in prices. In accordance with the standard rate, the increase of prices in larger vehicles ranges from 22 percent to 24 percent. There is no option but passing on the element of tax increase to customers from producers.  The prices of small cars are being increased by the companies. Additional levies will be imposed if the problem of slow sales is being faced by the company along with high fuel prices and interest rates. The growth in passenger vehicle sales is by 2.95 percent. 30 percent growth was witnessed in the previous financial year.

If there is no reduction of interest rates in future, then the industry would have to increase the prices more. Due to this increase, the buyers would be affected indirectly and the sales would slowdown. The prices are being raised by Toyota by two to four percent. The impact of increased prices of the products is being assessed by some luxury automobile manufacturers such as Audi, BMW and Mercedes.  A fifteen percent rise would be seen in case of imported cars. Thus, the increase in the excise and customs duty on cars is definitely very surprising. This would surely affect the customers who are looking for efficient and better cars. The pricing strategy needs to be re-evaluated in India.

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