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Journalism of Courage
Buyers of some imported top-end premium cars and SUVs can mourn. Standard price tags of Rs 14-20 lakh may change. Some manufacturers plan to pass on the additional burden to customers. Others won’t take that risk right now, but rather sulk and bear the pain.
With Chidambaram’s Budget, the effective rate of duty (includes existing duty and the new education cess) on imported completely-built units (CBUs) has hit 103 per cent from 100.2 per cent earlier. This translates into a hike of about Rs 30,000-40,000 on premium vehicles.
“CBUs will be hit the maximum. The price increase, as a result of the change will work out to Rs 30,000-40,000 on the the SUV Terracan,” Hyundai Motor India president BVR Subbu said. The Korean manufacturer said it would take a decision on prices by month-end.
There are exceptions to Hyundai’s plan. For example, Maruti Udyog, which imports the Suzuki Grand Vitara, doesn’t seem like biting the bullet yet.
“We have not worked on it yet. At the moment, we have unused kits so the Vitara will continue to be sold at the existing price. We will take a decision when the new kits are imported,” Maruti Udyog managing director Jagdish Khattar said.
Though the impact of the increase in tariff hurts all premium car and SUV imports, some others too may decide not to pass the pain on to the customer. At low volumes, a wait-and-watch strategy may prevail.
The Honda CRV, which has been popular amongst the SUVs, may continue to be available at the existing price tag of Rs 14.5 lakh for some time. Honda Siel Cars India director NK Goila said: “We have some stocks available with us of the CRV at present. We will be taking a view on prices when the new kits come in by July-end after doing a re-calculation”.
Those planning to buy a Chevrolet Forrester or the Vectra may not have to shell out those extra thousands either. “We are not contemplating any increase in cars imported as part of the CBU programme as we feel that the impact of the duties is not much,” General Motors India spokesperson said.
An industry expert argued that sales in that niche are price inelastic. “So, even if a customer has to shell out some Rs 30,000-40,000 more, there won’t be any impact,” he said requesting anonymity.
Premium car manufacturer Mercedes Benz India would also be hit by the hike in import tariff because of its import dependence.
Manufacturers that are assembling cars and SUVs from imported completely knocked down (CKD) kits will also be adversely affected to some extent by the two per cent education cess though the impact on them will be lesser since their effective duty has gone up from 39.2 per cent to 40.4 per cent.
“In the Elantra or the premium luxury car Sonata, the impact won’t be much as most of the operations have been localised,” Hyundai’s Subbu said.
