Sports utility vehicles (SUVs) and imported luxury automobiles will become costlier by up to Rs 15 lakh, if the Finance Minister P Chidambaram’s proposal in the Budget for fiscal 2014 to hike both excise and customs duties on these products is passed in the Parliament.
Excise duty on SUVs has been increased to 30 per cent from 27 per cent, while all luxury vehicles will attract 100 per cent import duty as against 75 per cent earlier. Also, the proposal envisages basic customs duty on motorcycles with engine capacity of 800cc or more being hiked from 60 per cent to 75 per cent.
Ford India President & MD Joginder Singh said, “At a time when the automotive industry is going through very challenging times, an increase in the excise duty for SUVs is a huge disappointment.”
Audi India Head Michael Perschke said, “An increase in customs duty for imported cars and excise duty on SUVs is very surprising. It will severely impact the auto industry and its growth. 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 SUVs.”
“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 Chief Operating Officer (Marketing and Commercial) Sandeep Singh said, adding that if sales fall drastically, people may even lose jobs, especially at the dealers’ end in the future.
“TKM will pass on the entire burden to consumers. The excise hike will affect our multi-utility vehicle Innova and SUV Fortuner, while the hike in customs duty will make our Land Cruiser and Prado costlier,” Singh said. The company is yet to finalise the exact amount. It will be a hike of Rs 30,000-50,000 for the Innova, he said, adding, “The Fortuner will be costlier by Rs 60,000-75,000. Similarly, Prado’s price will go up by Rs 10-12 lakh. We will also raise the price of the Land Cruiser by around Rs 15 lakh,” Singh said.
Expressing similar sentiments, General Motors India President and Managing Director Lowell Paddock said the Budget did not meet expectations as far as the automotive industry is concerned. "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.
However, Nissan Motor India Managing Director and Chief Executive Officer Takayuki Ishida expressed: “The excise hike for SUV will not have a drastic impact; it is most likely to distinguish the price barometer between sedans and SUVs even more clearly than ever before.”