Latest Car News in India

Wednesday, February 29, 2012

By Manoj Kumawat

Mahindra to slow down investments if there is tax on diesel cars, others to follow suit

Mahindra India has said that it will have to revise or check the pace its expansion plans if the government induces tax on diesel cars. Notably, Mahindra has mostly diesel cars offerings in India and an additional tax on diesel cars will invite negative impact on its car sales and thus will be severely diminishing Mahindra’s proposed plans. Mahindra produces some of the best SUVs in India such as recently launched Mahindra XUV 500 and also caters to passenger cars with Mahindra Bolero besides others, all in diesel. It will be Mahindra that will bear the brunt of the proposed hike in tax on diesel cars as 99 percent of its volume of car sales is from diesel cars.

Mahindra XUV 500 Pictures

See More Mahindra XUV 500 Photos Get Mahindra XUV 500 Price

M&M president Pawan Goenka has reportedly said that Mahindra will be one of the sufferers of the new temporary or permanent diesel tax and will adversely affect company’s expansion plans. Similar sentiments were revealed by Renault and Ford India as well. Besides, the tax induction will also force the industry players to rework their sales targets and volumes apart from rethinking on the proposed launches in India. In all, the auto experts are considering the increase in tax on diesel cars as impending the growth of the industry that is already in a not-so-good phase. The Indian auto industry has seen worst in 2011, and with the proposed tax on diesel cars, things will worsen in 2012 as well. However, car sales have picked up in January but are expected to retard with such reports coming in.

Mahindra Bolero Pictures

See More Mahindra Bolero Pictures Get Mahindra Bolero Price

The diesel tax will be dissuading Mahindra from investing more on the Chakan plant. However, Mahindra has made it clear that it will not stop investing more, but will certainly slower the pace of investments. On the other hand, the committee that proposed tax on diesel cars has recommended a increase of Rs 80,000 on diesel cars which means the already costly diesel cars will be costlier and with it Mahindra, Tata and Maruti diesel cars will be the worst hit. The fate of the newly launched Maruti Swift Dzire CS diesel also seems to be meek.

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