Car makers to hike rates after duty increase

Major auto makers in the country reacted to the government's decision.

Major auto makers in the country reacted to the government’s decision to increase the central excise duty to 10 per cent by saying they will increase car prices – possibly by up to Rs 25,000.

While the country’s largest car maker,Maruti Suzuki India (MSI),said its car will become costly by two per cent,Hyundai Motor India said it will result in a price rise of Rs 6,500-25,000 on average.

“Car prices will go up by about two per cent. This is essential to offset the increase in central excise duty announced by the Finance Minister,” MSI Chairman R C Bhargava said.

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The government increased the central excise duty by two per cent to 10 per cent,partially rolling back the cut made earlier.

Meanwhile,a Hyundai Motor spokesperson said: “We will be forced to hike our prices by Rs 6,500 to Rs 25,000.”

Volvo Auto India also said that the increase in excise duty will result in increase of price of its cars.

Auto industry irked by excise duty roll-back

Auto industry players have received the budget with mixed reactions,describing the increase in excise duty as well as those of petrol and diesel prices as possible dampeners for the sector.

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Most of the players did not expect any hike in excise duty and imposition of duty on petroleum products and hence have been taken aback by the budget.

“The budget was not on expected lines. We did not anticipated the roll back of 2 per cent excise duty – this will hurt the auto industry,” Society of Indian Automobile Manufacturers (SIAM)’s president,Pawan Goenka,said.

“The continuation of the stimulus packages would have helped the Indian automobile industry regain its growth momentum,” he said.

Fiat India’s president & CEO,Rajeev Kapoor,termed the budget as futuristic and said that it addressed the long-felt need for rationalisation of direct and indirect taxes.

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Reacting to the announcement,Michael Boneham,President & Managing Director of Ford India,said,”This is a mixed bag budget,it provides a strong impetus on social and infrastructure development with the aim to achieve a 9% GDP growth rate but lacks any positive elements for the automobile industry.”

“The hike in excise duty on cars by 2% is a major disappointment for the automobile industry as there was strong need to continue the stimulus to support the ongoing fragile recovery. This is sure to affect consumer sentiments when taken with the simultaneous hike in fuel prices as it will lead to an overall increase in motoring ownership,” he said.