Friday, 16 March 2012

Budget 2012: Proposed diesel vehicle tax and impact on Maruti Suzuki

With Budget 2012 just round the corner and couple of hours left for the strategic decisions which could play a major role in deciding the fate of the Indian automobile and auto component manufacturers. The various below appended proposals have been put up and based on which the decisions would be taken today.

  • Additional Excise Duty on Diesel Vehicles at Rs 80,000 per vehicle
  • Increase in Diesel Prices. Moreover we could get some clarity on the Diesel policy for the coming years as this has put huge investments on hold.
  • Incentives to be given to Auto Component manufacturers for promotion of R&D facilities in India.
The largest exposure to the budget could be to Maruti Suzuki India Limited, it being the largest automobile manufacturer in India. At present, Maruti Suzuki has most of the total diesel cars (currently about 25% of domestic portfolio, and estimated at 29%+ for FY13), and the diesel tax (Rs. 80,000) can substantially impact our FY13 estimates for Maruti. Additionally, MSIL also plans to put Investment to manufacture Diesel engines in Manesar with a total investment of Rs 1,000 Cr. which is currently on hold.

Stay tuned for more Updates on Budget 2012 Impact on Automobile.


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