With an increase in the excise duty on all products in the Budget for 2012-13,carmakers like Maruti Suzuki,Mahindra & Mahindra and Honda Siel Cars India will hike prices of their vehicles by up to Rs 70,000.
“We are going to raise the prices of all our products and will pass on the entire additional excise duty. Currently we are working on the exact amount of the hike,” Maruti Suzuki India Managing Executive Officer (Marketing and Sales) Mayank Pareek said.
Homegrown auto major Mahindra & Mahindra also said it will increase the prices of its entire range of products.
“Given the current economic scenario and the revenue deficit of the country,the hike in excise duty was fully anticipated. Although the industry will not cheer about this,but we have to live with it,” Mahindra & Mahindra President (Automotive and Farm Equipment Sector) Pawan Goenka said.
The industry will pass on the entire burden of excise duty to customers,he added.
“The input costs have also gone up in recent times. Considering this,we will raise the prices of our vehicles by 2-3 per cent,translating into an increase of Rs 6,000 to Rs 30,000,” Goenka said,adding the exact amount will be fixed in due course of time.
The company will also increase the prices of its tractors by up to Rs 5,000 to Rs 6,000,he added.
“In the short-term,there will be an impact on the demand for the vehicles. However,if the interest rates favourably come down,we may see revival of demand in the auto industry in future,” Goenka said.
Honda Siel Cars India Senior Vice President (Sales and Marketing) Jnaneswar Sen said prices of all locally produced cars will be raised.
“We will pass on the entire burden to customers. We are currently evaluating the quantum of increase. In case of small car Brio,it will be around Rs 7,000,while the same will be Rs 60,000 to Rs 70,000 for the luxury sedan Accord,” Sen said.
General Motors India Vice President P Balendran too said the company will increase the prices of its all vehicles.
“We have not finalised the quantum of increase yet. We are going to pass on the entire hike. This is not a good step for the industry. It will further impact the sales,” he added.
Finance Minister Pranab Mukherjee today announced raising of excise duty to 12 per cent from 10 per cent at present.
Excise duties for petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc,but the length exceeding four metres have been increased to 24 per cent from 22 per cent and a fixed duty of Rs 15,000.
Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc respectively will now be charged with an ad valorem duty of 27 per cent,instead of the earlier 22 per cent and a fixed dutyof Rs 15,000.
The country’s second largest car maker Hyundai Motor India said the hike in excise duties will impact sales as disposable income of consumers will go down.
“This is not a positive step for the auto industry,which is already reeling under high interest rates. We will pass on this entire burden of increased excise duty and service tax to consumers,” Hyundai Motor India Director (Marketing and Sales) Arvind Saxena said.
The company will hike the prices of its entire range of products with immediate effect,he added.
“While we are still working on the final amount of hike,but it will be about Rs 5,000 for the small car Santro. The automatic version of the sports utility vehicle Santa Fe may be more expensive by about Rs 81,000,” Saxena said.
Car maker Toyota Kirloskar Motor (TKM) said it will increase the prices of its entire range of products by up to four per cent due to hike in excise duty.
“Our team is working on the final outcome of the price increase. Considering our small and big cars,the price rise will vary between two per cent and four per cent,” TKM Deputy Managing Director (Marketing) Sandeep Singh said.
He said due to increase in prices,demand for vehicles will be impacted further.
Sports Utility vehicle like Land Cruiser and Prado will also become more expensive.
Another car maker Ford India will also hike the prices of its all vehicles.
“The excise duty hike is a matter of concern and it is an unfortunate decision. We are going to hike the prices of all our vehicles and our team is currently working on the quantum of exact hike,” Ford India President and Managing Director Michael Boneham said.
Homegrown auto major Tata Motors also said it will hike the prices of its entire range of passenger and commercial vehicles due to hike in excise duties.
“Tata Motors has decided to increase the prices of its commercial vehicles and passenger vehicles,with immediate effect,proportionate to the increase in the corresponding excise duty announced in the Union Budget today,” the company said in a statement.
Tata Motors,however,did not share specific details about the amount of hike to be undertaken on different models.
Society of Indian Automobile Manufacturers (SIAM) said the vehicle makers were not expecting duties on large cars to go up in the Budget.
“While the auto industry appreciates that there was a compulsion to increase base rates of service tax and excise duty,the industry had hoped that the excise duty on large cars would have come down from 22 per cent to 16 per cent rather than going up,” SIAM President S Sandilya said.
The 27 per cent excise duty will lead to significant increase of tax for large premium cars,he added.
General Motors India President and Managing Director Lowell Paddock said: “As far as the automotive industry is concerned,it did not meet the expectations. The industry did not expect any increase in excise duty on passenger cars.”
The company will raise the prices by Rs 4,000 to Rs 35,000,GM India Vice-President P Balendran said.
Maruti Suzuki India Managing Director and CEO Shinzo Nakashi said: “The increase in excise duty will hurt automobiles at a time when industry is in the midst of a slowdown due to the combined effect of high interest rates and high fuel prices.” Automotive Component Manufacturers Association of India (ACMA) said enhancement of excise duty will adversely impact the prices of vehicles and in turn their consumption.
“This is of concern to the auto component sector as the sector grows in tandem with the vehicle industry,” ACMA Executive Director Vinnie Mehta said.
Further,the hike in customs duty on the ‘flat-rolled’ steel to 7 per cent from 5 per cent may unfavourably impact the auto component sector as this is one of the key input materials for the industry,he added.