Car news

28 February 2013

Analysed: Union Budget 2013-14 for cars and bikes

If you thought the Government was going to make car buy less taxing for you, then its time to wake up and smell the coffee

Devesh Shobha
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You don’t have to be an economic scholar or well versed with the current political scenario in our great country to comprehend what our beloved Government had in stores for the petrol heads this Budget.

To begin with, all small cars under 4-metre length and with a 1.2-litre petrol and 1.5- litre diesel motors will continue to attract 12 per cent excise duty. Everything else will now get expensive. Lets start with the hot-selling Sports Utility Vehicle segment. Those who were in the market for a soft-roader or a rugged SUV will now have to shell out more as the excise duty on these vehicles have been hiked to 30 per cent from the earlier 27 percent. However, if you are comfortable roaming around in an SUV registered as a Taxi, then you can pay a lesser duty of 27 per cent.

With the Government proposing an additional surcharge of 10 point on the rich taxpayers, the riches in the country will also feel the heat while buying imported luxury cars with the import duty rising from 75 per cent to 100 per cent. However, this move will further boost local production and expect more and more car manufacturers to invest in local production facilities over the next year.

High-end motorcycles too haven’t been sparred and bikes above 800cc will see a hike in import duty from 60 to 75 per cent, come April 1, 2013.

However, manufacturers of Electric Vehicles in India can breathe a sigh of relief. In order to boost manufacturing and selling of EVs, the Government has extended the current concessions on specified parts of electric and hybrid vehicles till March 31, 2015.

The latest union budget proposed by finance minister P Chidambaram has received mixed reactions from the auto industry. Auto gurus are expecting a severe impact on the auto industry and its growth owing to the increase in Custom Duty for imported cars and Excise Duty on SUVs. Already the industry has been facing a lot of pressure from a number of factors like increasing fuel prices, high input costs, persistent inflation and high interest rates. And the latest duty hikes will only act as a dampener.

Commenting on the budget, Audi India head, Michael Perschke said, “We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer. Overall it will have an adverse impact on automobile industry which is already going through a slowdown and specifically affect demand including that of SUVs.”

“The government should have looked at extending support to auto industry, which has been contributing, significantly to the GDP and could have formed a strategic pillar of industrial development,” he added.

On the excise hike for SUVs, Takayuki Ishida, MD & CEO, Nissan Motor India has said, “It will not have a drastic impact. But it will most likely distinguish the price barometer between sedans and SUVs even more clearly than ever before.

Ashish Chordia, Chairman, Shreyans, who is the official and exclusive importer for Ducati, Ferrari and Maserati in India has quoted; "The increase in import duties on CBU's and bikes over 800cc is indeed going to affect the growth of the automobile industry. A move that provided impetus to the industry, already under pressure, was needed. While aspirational products like Ferrari and Ducati may not have an immediate effect on demand, it may slow down the long range plan for India.”


Tags: audi, ferrari, nissan, maserati, ducati, union budget



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