Tuesday, 20 March 2012

Budget 2012: Don't pay more for old stock cars; duty hike applicable only on dispatches from March 16

If the Budget's excise increase has put off your plans to get a new set of wheels, don't worry. You can still get your car (or bike) at the old, pre-Budget prices, particularly if you booked your vehicle before the Budget or the dealer is selling older stock.

Car makers said the new rates will be applicable on dispatches to dealerships from March 16 onwards. Given that the Budget this year was bang in the middle of the month rather than at the end, dealerships will likely have old stocks which can and should be sold at the old rates. Which means customers can demand abetter price while choosing a new car, that is till stocks last.

"Bookings currently held by dealers will be offered at the older price, provided the dealers have the relevant stock," says Arvind Saxena, director (marketing and sales), Hyundai Motor India. Hyundai, like all other car and bike companies, will raise prices ranging from Rs 5,000 on the Eon to Rs 85,000 on the Santa Fe.

Mahindra & Mahindra (M&M ) will also be charging the marked-up price on its vehicles, only for new stock. "Starting from March 16 (Budget day), as we send vehicles, it will be with a new price tag. But what the dealers do with the existing stock is up to them. Technically, existing stock should be sold at the older price, but it's the dealer's prerogative," said Pawan Goenka, president (auto and tractor division), M&M.

Auto financiers said customers should demand at least an intervention - if not the old price tag - for vehicles booked before the Budget announcement . Given that the auto industry has been facing ademand slowdown, except in February when the expectation of an excise spurred sales, dealers can be persuaded to offer a better deal despite the excise hike. The booking issue is also important given that many diesel models - the only segment where demand has seen good growth in recent months - boast long booking lists.

Auto industry experts also said that with the service tax and excise duty increase impacting demand, car companies and dealers will have to roll out some promotional schemes to push sales. Car marketers already believe the double whammy will badly hit sentiment and the market may not bounce back in the second half of this financial year as earlier expected.

"The overall increase in prices, thanks to the excise and service tax hikes, will hit demand sentiment in the industry, squeezing disposable incomes for big ticket items like cars," said Saxena. "Interest rates remaining where they are, there will be pressure and, internally, our estimate for the industry is around 5-7 % growth," he said.


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