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Updated: March 1, 2013 04:19 IST

Duty on imported cars disappoints industry

Ramnath Subbu
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The hike in customes duty on fully built imported vehicles from 75 per cent to 100 per cent in the Budget 2013-14 has disappointed the industry but given its small size, the impact may not be significant.

Speaking to The Hindu, Wilfried Aulbur, Managing Partner, Roland Berger Strategic Consultants, and former MD & CEO, Mercedes Benz India, said, “the fully imported vehicle market in India is around a mere 3,000 units per annum. If one considers the big three German players — Audi, Mercedes Benz and BMW — fully imported vehicles constitute 7-10 per cent of their portfolio here.’’

The increase in duty is surprising, according to Michael Perschke, Head, Audi India. “We will have to seriously evaluate the impact of this hike on our prices and have no choice other than to pass on the increase to the customer. Overall, it will have an adverse impact on the automobile industry which is already going through a slowdown and specifically affect demand, including that of sports utility vehicles (SUVs),’’ he said.

“Given the small market, the revenue collection from the imposition would not be that high,’’ said Mr. Aulbur, adding, “There could possibly be some shift from fully imported vehicles to domestic manufacturing and it would make sense for original equipment manufacturers (OEMs) to shift from fully imported vehicles to some local assembly.”

Our Delhi correspondent writes:

“This is not a good Budget for the automobile industry. With duty hikes, all manufacturers will pass on the burden to consumers and this will further dampen the ongoing sluggish sales,’’ Toyota Kirloskar Motor (TKM) Deputy Managing Director and COO (Marketing and Commercial) Sandeep Singh said. He said TKM will pass on the entire burden to consumers.

“The excise hike will affect Innova and SUV Fortuner, while the hike in customs duty will make our Land Cruiser and Prado costlier. The hike for Innova could be around Rs.30,000-50,000. In the case of Fortuner, it could be around Rs.60,000-75,000. Similarly, Prado’s price is likely to go up by Rs. 10-12 lakh and that of the Land Cruiser by around Rs.15 lakh.

General Motors India President and Managing Director Lowell Paddock said “We were expecting the roll back of the excise duty imposed last year. These hikes are not on the expected lines and will impact the sale of SUVs,’’ he added.

Our Kolkata correspondent writes:

Hindustan Motors is disappointed over the budget saying that the hike in excise duty on SUVs by 3 per cent is a blow.

Uttam Bose, Managing Director, Hindustan Motors, said the auto industry has been the worst affected by the ongoing economic slowdown and the industry was expecting reduction in excise duty across all vehicle segments to combat the current crisis. He was thankful that the hike was limited to SUVs.

Mr. Bose said that the finance minister has given hope to the industry by allocating Rs.14,873 crore to Jawaharlal Nehru National Urban Renewal Mission (JNNURM) which will lead to growth in public transport. Companies in the commercial passenger vehicle segment should benefit.

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