Mahindra May Trim Down its SUVs to Fit Additional 3% Excise

Mahindra is the leading name in SUV tags, and to be more precise, XUV 500 is the hot cake rolling out from factory of this India based carmaker, but it seems, 2013 Union Budget had steeply disappointed Mahindra over the non-reconsideration of additional 3% excise on SUV belt. The organization had raised concerns in the present economic scenario and had said, any additional duties levied by the Government will be counterproductive from a revenue generation viewpoint. Organization also hoped some of the positive factors to work out in their favor, as some of the frugal representations were made by Hon. Minister MOHI, Chairman Finance Committee, Society of Indian Automotive Manufacturers (SIAM), and other automotive companies in the segment to our government for same, but disappointingly all the efforts went down deep in water.

Speaking on the impact, Dr. Pawan Goenka, President, Automotive & Farm Equipment Sectors, Mahindra & Mahindra Ltd. said, “Our initial analysis shows that industry sales of SUVs on which excise duty has been increased by 3% have gone down by 14% in April 2013 as compared to last year. This is contrary to the 24% growth witnessed in April 2012. The increase of 3% excise has resulted in the decline, instead of growth in a segment which was the fastest growing till recently. Clearly, this is a big dampener and it has also affected the overall industry sales.

Mahindra XUV 500

In addition to the already existing drawbacks, diesel prices have also been raised extensively in recent times, which as an outcome had decreased the differential gap between petrol-diesel lock to 26%, unlikely to the 46% of last year. Stretching the discussion further, Dr. Goenka added, “If the increase in excise duty is to compensate for the diesel subsidies, why haven’t all diesel vehicles been included under the proposed increase?  If it is for road congestion, why haven’t all large vehicles been subjected to the same tax hike?  If this is a tax on the rich, why not tax all vehicles above a certain price point? ”

Well, too much of the heat, Mahindra may have to modify their vehicles for fitting perfect in the brackets of low excise points.

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