Latest Car News in India

Friday, March 16, 2012

By Pawan Rana

Leading car makers hike car prices following excise duty rise in Budget 2012

The leading car makers in the country are set to hike the price of their Indian portfolio cars following the Indian government’s decision of increasing excise duty on all segments of cars in the Union Budget 2012-13. Majority of car makers have shown disappointment over the government’s decision of hiking excise duty, as the industry is already struggling to come-out of more than 6 continuous months of slowing down sales.

The country’s leading luxury car maker Mercedes Benz India said in a statement today that it will be raising the prices of its portfolio cars in Indian by up to Rs 3 lakh. Speaking on the matter, Mr. Suhas Kadlaskar, Mercedes Benz India Director (Corporate Affairs and HR) said that the budget is very disappointing for the car maker as they were hoping for some reduction in taxes for larger car segment. He added that the company is going to pass the burden of this additional tax to the customer, though the size of price hike is yet to be decided.

Mercedes Benz C Class Pictures

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On the other hand, the country’s largest vehicle maker Tata Motors has announced to hike the price of both of its commercial and passenger cars with immediate effect. The price hike will be in proportion with the hike in the excise duty by the government.

Mercedes Benz CLS Class Pictures

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The government has decided to increase the excise duty to 27 percent from the earlier duty of 22 percent over the petrol and diesel vehicles of more than 4 meters in length and powered by 1,200 cc and 1,500 cc engines, respectively. Moreover, the basic customs duty has been hikes to 75 per cent from earlier 60 per cent on the fully imported cars carrying FOB value of over $ 40,000 and powered by 3,000 (in case of petrol version)cc and 2,500 cc (in case of diesel version) engines.

Mercedes Benz GL Class Pictures

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Ford India has also stated that the company has to increase its car prices due to the raised excise duty. He said that the impact of the decision will be negative on customer’s confidence.

However, the increase in customs duty on import of luxury cars has been welcomed by industry body SIAM (Society of Indian Automobile Manufacturers), as it will promote and encourage local manufacturing, value addition and employment.

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