The Union Budget 2013 has just made the cars that the Indians love the most costlier. The excise duty on the Sports Utility Vehicles (SUVs as we know them ) will now have an excise duty of 30 percent levied on them instead of the current 27 percent which is levied. But all the other cars which are levied an excise duty of 12 percent will be taxed at the same rate so the volume cars would not really see SUV Price increase in India soon as the next financial year approaches.
The rationale behind the increase as been given as, “SUVs occupy a greater parking space, we intend to increase excise duty on SUVs from 27% to 30% but Utility Vehicles registered as taxis would not be levied this additional tax.” The Utility vehicle segment has seen an increase in its share in the passenger car market from 14 percent in the last fiscal to over 20.51 percent this year. Luxury cars also see an increase in the import duty so luxury just got pricier.
The company which will suffer the maximum from this is Mahindra and Mahindra who have a 48 percent share of the segment. The industry specialists are also condemning this move and the second largest UV maker in the country, Toyota Kirloskar will also be affected by it. The company has been going through a rough patch off late and its bestsellers, Innova and Fortuner will be hit furthermore with the increased duty. 15 percent of Innovas get registered as taxis so that is the number which would not come under the purview of increased duty.
The import duty on CBUs has gone from 75% to 100% and for the motorcycles which will displace more than 800 cc, the duty will now be levied at 75% instead of 60%. We can see this as a move to help the consumer as well as now companies might consider setting up units in the country itself and introduce luxury cars at different price points with higher localisation levels. And as far as the bikes go, Harley-Davidson has already started localising its bikes and we’ll see other companies follow them soon enough.