Latest Car News in India

Friday, February 17, 2012

By Shilpa Chopra

Ford India calls taxing diesel cars as regressive for car industry

Ford India has reportedly condemned the imminent levying of cess on diesel cars and has termed it to be ‘regressive’ for the diesel car sales in India. The American car maker has also called it an incorrect approach to bridge the differential pricing of diesel and petrol. Instead, a hike in diesel price could be the right decision to earn more revenue, said the car maker. There is an imminent increase in tax on diesel cars in India and following which diesel car prices in the country will shoot up signaling a great setback to the already slow market currently. Notably, Ford India has recently opened 45 new dealerships in the country and has many products such as Ford EcoSport and Ford B Max in the offing soon and has also invested a lot on the new diesel plat it is developing in India. With the new tax policy in effect, Ford will be also at a loss besides other car makers.  

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Michael Boneham, president and managing director of Ford has reportedly said that the company is expecting a change that is consistent with the present conditions. He further reportedly said that since the interest rates are already high it would be wrong to tax diesel cars. Terming the new impending tax as ‘a regressive step’, Boneham reportedly has reiterated that taxing diesel cars will be unfair for the car industry. According to him, if the new taxes are in place, diesel car prices will shoot by Rs 80,000. Notably, the diesel cars are already costlier than the petrol siblings and with the new tax regime in place, diesel car prices will be out of reach and will greatly affect diesel car sales by 30-40 percent decrease.  

Suggesting a way out of the situation, Boneham has reportedly suggested the government that it can increase the diesel price by 75 paise per litre as it will not add additional burden on anybody and will also save the diesel car industry from a severe impact. As per an estimate, since Indian economy is growing steadily and inflation is down, it is expected that the interest rates would fall and this would give a boost to the car sales in the country. However, if the new taxing is there, there will be lesser sales of diesel cars and it will affect the overall performance of the industry a lot.

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