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Archives

Budget 2013 a blow to SUV makers

15/03/2013 | Author: Autoguide | 0 Comments Back To Home   < Previous News   |   Next news >

Industry leaders

WITH the proposed hikes in custom and excise duties on imported luxury cars and Sports Utility Vehicles (SUVs), the Budget 2013 comes as a blow to the luxury car and SUV manufacturers. The prices of these vehicles might go up with raised taxes. The Car and Utility Vehicle manufacturers have expressed their discontent over the hikes while auto industry based associations like ACMA and SIAM have mostly welcomed the Budget on the whole.  The Finance Minister in his Budget speech has detailed an increase in the customs and excise duties on luxury cars, SUVs and high-end motorcycles, thereby making them dearer to the end user. The customs duty on engine capacity exceeding 3,000cc for petrol-run vehicles and more than 2,500cc for diesel-run ones has been raised from 75 per cent to 100 per cent. This will likely translate into a hike of anywhere between Rs 25 lakh and Rs 1 crore, after the imposition of additional local taxes and surcharges.  Also, excise duty on SUVs has been raised by three per cent from 27 per cent to 30 per cent. However, those registered as taxis will not have to bear the additional tax burden. Prices of the country’s top-selling SUVs Mahindra XUV500 and Scorpio, Renault Duster and Toyota Fortuner might go up considering the hike.  In the last budget, customs duty on this imported segment of cars was raised to 75 per cent from 60 per cent, which resulted in an upward revision of Rs 20-40 lakh on models such as Ferrari, Aston Martin, Lamborghini and Rolls Royce. The present revision to 100 percent will continue to dampen the demand pull for these imported vehicles.  Customs duty on motorcycles with engine capacity of 800cc or more has also been increased from 60 percent to 75 percent. The US-based premium bike Harley-Davidson and some other imported models of Honda, Yamaha and Suzuki are all set to get costlier to the end consumer. The Union government in Budget 2013 has proposed to buy 10,000 additional buses under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which is being continued under the 12th Plan. Out of the proposed Rs 14,873 crore provided for JNNURM, a significant portion will be used to purchase buses used especially in the hill states. This will indirectly boost the demand in the bus segment as Mumbai-based Tata Motors and bus market leader Ashok Leyland will likely to be the biggest beneficiaries of this purchase order.  Mr Pawan Goenka  Speaking on the proposed hike in SUVs, Mr Pawan Goenka, President, Automotive and Farm Equipment sector, M&M said, “The 3 per cent increase in excise duty for SUVs came as a surprise. It will certainly have a dampening effect on the industry. While the tax in itself is a concern, what I am perplexed about is the criterion for ground clearance. I fail to understand why a higher ground clearance is a demerit!”  Mr S Sandilya  Expressing his sentiments SIAM’s President, Mr S Sandilya said the industry did not expect increase in excise duty on SUVs used as personal vehicles. “This is the only segment in the industry which has been doing well this year and increasing price of these vehicles would dampen sales and impact market sentiments further”. SIAM however, welcomed the Finance Minister’s move to increase customs duty on luxury cars and motorbikes.  “This seems to be an effort to raise more revenue and to encourage local manufacturing, value addition and employment. The proposal to increase duty on second hand vehicle from 100 per cent to 125 per cent is the right step. It clearly conveys that India is not ready to accept second hand old vehicles from other countries”, Mr.Sandilya added.  Mr Sandeep Singh Commenting on the budget, Mr Sandeep Singh, Deputy MD 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. 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.”  Mr Surinder P Kanwar  Welcoming the proposals in the Union Budget 2013, ACMA President, Mr Surinder P. Kanwar said, “ACMA welcomes the focus on measures to encourage the Micro, Small and Medium enterprises (MSMEs). MSMEs constitute over 70 per cent of ACMA’s membership and scaling-up has been a challenge for the sector. With assurances in the Budget that the incentives enjoyed by MSMEs would continue undiminished for the next three years should they out grow their limits, is a step in the right direction. The enhanced allocation of over Rs 14,000 crore for buses under the JNNURM will also give a boost to this segment and the associated auto component consumption, which has been suffering for sometime now.”  “The budget also announced enhancement of excise duty from 27 per cent to 30 per cent on SUVs, which has been one of the fastest growing segments in the vehicle industry. Considering that the vehicle industry in the country is witnessing negative growth, this measure would adversely impact the industry sentiment”, Mr Kanwar added.  Mr Lowell Paddock  Speaking on the hikes, General Motors India President and MD Mr.Lowell Paddock said, “We were expecting the roll back of the excise duty imposed last year. These hikes are not on the expected lines and will impact the sale of SUVs”.  Mr Joginder Singh  Speaking on the budget, Mr Joginder Singh, President and Managing Director of Ford India said, “As we all know, the automotive industry has been going through very challenging times. We are disappointed with the increase in the excise duty for SUVs.”  Mr R C Bhargava  Mr R C Bhargava, Chairman, Maruti Suzuki India said, “The increase in customs duty for luxury vehicles, as well as excise on SUVs is more symbolic and will not have an impact on the growth of the auto industry.”    

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