Saturday, 2 March 2013

No Price hike for Renault Duster Diesel post Budget 2013-14

Budget 2013-14 in India had mixed reactions from various industries and sectors. As far as Automobile Industry is concerned, there was a widespread negative response with claims of an unfair policy measures with respect to increase in Excise duty hike from current 27% to 30% for SUV's, with the reason that these vehicles occupy greater parking space and hence a greater tax.

The definition was on Friday clarirified by our honourable Finance Minister, Mr P Chidambram that all those vehicles falling under the category of having engine capacity higher than 1.5L, their length greater than 4 metres and ground clearance greater than 170mm would be eligible for a higher excise duty tax of 30%.  It clarified the various questions as to which car maker should announce a hike in their vehicles and of these which one's would be passed on to the consumers.

Renault's Duster, since its engine K9K, is less than 1,500 cc, (1,461 cc to be exact), does not falls under this category. However, Renault's Duster Petrol version price hike could be expected soon. There would be price hike for its immediate competitor Mahindra's Scorpio and XUV 5OO and it could be ranging from  Rs 15,000 upto Rs 30,000. Infact, Mahindra's all SUV's, except Quanto would be eligible for a price hike due to excise duty hike burden.

Maruti Suzuki's popular MPV is also saved due to price hike since its Diesel engine falls under 1.5L and is powered by Fiat's 1.3L SDE engine and  similary Petrol version powered by .14L K14B engine - it would be excluded from the price hike.

Sandeep Singh, DMD and COO of the second largest utility vehicle maker Toyota Kirloskar told ET, it is an overall balanced budget and has not thrown major surprises however. "It has not brought any good news for the passenger vehicle industry. We were expecting some sort of relief on excise duty on the contrary duty on SUVs has gone up. People will come to terms with higher prices of SUV in our case in a quarter, but the impact on MPVs (Innova) will be big for us."

The biggest hit will be India's largest utility vehicles maker, Mahindra & Mahindra which sells over 21,000 units in a month and has a lion's share of almost 48% in the segment.

Pavan Shetty, Head, Lamborghini India said, "The move is very negative for the sector. Over the last two years the absolute duties have gone up by over 67%. We will have to review our prices shortly."

According to Wilfried Aulbur, Managing Partner - Roland Berger Strategy Consultants, India around 3,000 to 3,200 units of luxury cars are imported as fully built units annually, and those numbers will be impacted by the duty increase.

"Increase in import duty will make it easier for companies to look at locally assembly. As far as the UV space is concerned, it is not a good idea to tax the segment, which is growing. The move will result in people postponing purchase of SUVs temporarirly, but the ones who want to buy will buy them due to body style and sturdiness of those vehicles," he added.


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