Prices of passenger cars and utility vehicles are set to go up in the New Year following the Union government’s decision to stop concessional excise duty rates with effect from December 31. Car manufacturers such as Hyundai and Honda have already increased prices, and Toyota and Maruti may follow suit.
The UPA government, in the Interim Budget presented last February, announced lower excise duties for automobiles until June 30, 2014, as support to the industry which was in the grip of a slowdown. The new government extended it to until December 31.
Prices of popular car models already up
Car sales saw an increase of four per cent during the April-November 2014 period at 1.21 million units when compared with a year-ago period. Likewise, sales of utility vehicles saw a rise of 5 per cent at 3.63 lakh units during first eight months of this fiscal.
The United Progressive Alliance government, in the Interim Budget presented last February, announced lower excise duties for automobiles until June 30, 2014, as support to the industry which was in the grip of a slowdown. The new government extended the period to until December 31.
“It [withdrawal of excise duty cut] is only a temporary setback and the benefit did not help significantly anyway. It is more to do with sentiment and this withdrawal was expected,” Daljeet Singh Kohli, Research Head of IndiaNivesh Securities, says.
“When the excise duty cut was announced in February, we passed on the full benefits to the customers. As it is a matter of taxes, we’ll be billing customers as per the higher price with immediate effect,” said Rakesh Srivastava, senior vice-president, sales and marketing, Hyundai Motor India.
The price of small car Hyundai Eon could go up by about Rs. 11,000, while the i10 Grand will see an increase of about Rs. 15,000 and the Verna’s price will go up by about Rs. 26,000.
Jnaneswar Sen, senior vice-president, marketing & sales, Honda Cars India, said the company had announced a price revision (4 per cent increase) for its models.
Maruti Suzuki said it was awaiting clarity and any decision on price hike would be taken post-January 5, when the company employees would return from year-end holidays. Toyota Kirloskar Motor said it would study the market reaction and announce the price revision.
(With inputs from Ramnath Subbu in Mumbai)
