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Another Burden on Indian Auto Industry

There has been lot happening in the Indian auto industry. Recently, the car prices were hiked due to the increase in raw materials. The government has also scrapped the excise duty on small cars, slammed an additional specific duty of up to Rs 20,000 per car and has introduced 24% excise on all large cars. All of this has added extra pressure on the industry. This new structure will come into effect immediately.

How this will affect the luxury car segment?

The cars that carry the engine capacity of 2000cc and above (SUVs and luxury cars) will carry the duty of Rs 20,000, 1500cc to 1999cc (mid-sized sedan) capacity engine would attract the additional specific duty of Rs 15,000.

This new burden of tax will affect the luxury car makers like Audi, Daimler Chrysler and Skoda but it is the Honda Siel Car India that will feel the punch as it is the market leader in the premium-car segment.

And as a result of this specific duty, the prices of Tata Safari, Tata Sumo, Mahindra Scorpio and Bolero, Toyota Innova and luxury cars, including BMW, Mercedes and Skoda would go up by Rs 20,000 per unit.

This is definitely not a good news for the buyers, as along with increased car prices it will put additional burden. However, small cars like Maruti 800, Alto, WagonR, Hyundai Santro, i10 and Tata Indica will not be affected as they have the engine capacity lower than 1500 cc.

Already, people are postponing their plan to buy a car because of the hike in fuel prices and cars and now this specific duty has given tough time to the car manufacturers. But one question arises here – will the favored small car segment further increase the price gap between the small cars and the large cars.

Indian auto industry is already undergoing a difficult time and the government has chosen a wrong time to implement this strategy. Hope some good factor pops up that will not only help the car manufacturers but also the buyers.

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