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Old 3rd February 2012, 12:25   #196
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Guys relax, IMO the tatas, M&M, Hyundais will make sure that Govt will not enforce additional duties on diesel cars. They will meet babus and warm thier hands and make sure they will not include this extra duties in this budget.
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Old 6th February 2012, 16:20   #197
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Default Budget 2012-Is there a hefty one time tax on diesel vehicles expected?

Budget 2012 is coming up this month and many news papers / articles are carrying the news that there is a possibility of a one time tax on diesel cars. The tax amount suggested varies between Rs.40,000 to Rs.80,000
Any credible information on these reports? I have also heard a couple of sales people telling me that some car re-sale agents have been stocking up used diesel cars so they could make a killing once the decision is implemented.
I'm not sure if the govt will actually go ahead and do this, but nothing will stop them actually. If they did levy a one time heft sum, I dont think they would face any major protests as such, unlike petrol price hikes etc.
This could change the equation of petrol : diesel cars in india. A difference of 1.5 to 1.8 lakhs between petrol and diesel variants could turn off a lot of diesel car buyers.
Also, manufacturers who have heavily invested in diesel tech { or beginning to, say like Honda} may face a huge setback.
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Old 6th February 2012, 16:23   #198
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Default Re: Budget 2012-Is there a hefty one time tax on diesel vehicles expected?

I do not think this onetime tax will be even put in the current budget bill leave alone passed. I hear there is huge lobbying by our big Auto manufacturers' (Read Tata/M&M) against such a tax. They would be the most affected parties due to this tax.
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Old 6th February 2012, 16:41   #199
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Default Re: Budget 2012-Is there a hefty one time tax on diesel vehicles expected?

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Originally Posted by DieselFan View Post
I do not think this onetime tax will be even put in the current budget bill leave alone passed. I hear there is huge lobbying by our big Auto manufacturers' (Read Tata/M&M) against such a tax. They would be the most affected parties due to this tax.
+1.

Auto manufacturers in India went into a real slump when petrol prices skyrocketed. Sale of petrol cars reduced dramatically and people shifted to diesel. Manufacturers literally scrambled to get diesel variants of their cars to get sales back up. Toyota, Nissan, VW, Skoda, Ford are mainly still surviving because of diesel variants.

Now if they increase the price of diesel cars even further, the delta between petrol and diesel will increase and diesel will become economically un-feasible in the long run. People will move towards somewhat towards petrol but many buyers will either downgrade or not opt for buying a car at all which will severely impact the auto manufacturers.

Govt. may want to start charging more for diesel cars but the auto companies will lobby against this strongly. Also I believe the diesel consumption by private cars is not even 1% compared to total diesel consumption. Don't remember the source but I think ToI had this.
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Old 6th February 2012, 16:42   #200
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Default Re: Budget 2012-Is there a hefty one time tax on diesel vehicles expected?

I agree with DieselFan here. If at all the additional taxes are levied, Mahindra and Tata will be the worst affected. Maruti has also signed a deal to procure 1 lakh engines from Fiat. These 3 big players are more than enough to lobby, and ensure that the proposed tax is not implemented anytime soon.

On the other hand the govt. will be pressurized to take some action to correct the huge disparity in petrol and diesel prices. Will have to wait and watch to see what happens.
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Old 6th February 2012, 17:55   #201
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Default Re: Budget 2012-Is there a hefty one time tax on diesel vehicles expected?

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Originally Posted by Vid6639 View Post
Also I believe the diesel consumption by private cars is not even 1% compared to total diesel consumption. Don't remember the source but I think ToI had this.
Budget 2012-13: Finance ministry for higher excise duty on diesel cars - Business Today

Green body accuses auto industry of fudging data to prevent higher taxes on diesel vehicles - Business Today

Here I found a links where its claimed to be 15%, that is a huge ambiguity. Now whom should we believe. But never the less, Diesel cars or Diesel prices will see some action in budget this time. For a govt. implementing diesel deregulation will be very tough, if they had to do they would have done it within few months of doing it for petrol. Now it makes more sense for them to tax the pvt. diesel cars as its easier to implement. And taxing at the Point of sale is very easy, obviously they can't implement backward recoveries from existing owners. That would be the lucky bunch who bought diesel cars after petrol deregulation.

The demand for diesel cars shot up because petrol was deregulated and not diesel, thou initially there was talk but it never materialized. Now Diesel cars in so much demand look at any models waiting period.

I think the best time to buy a diesel car is now until the budget starting April 1st.

According to Society of Indian Automobile Manufacturers (SIAM), "From April last year onwards, the demand for diesel cars has gone up by more than 24 per cent, while the sales of petrol car has declined by 16 per cent." Earlier, the share of diesel cars was restricted to 25 per cent of total sales but from April, 2011 onwards it has gone up to 70-80 per cent for the models offering diesel variants. At present, diesel cars account for 40 per cent of total auto sales.

Source:
http://businesstoday.intoday.in/stor...s/1/21630.html

Last edited by samsan02 : 6th February 2012 at 18:03.
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Old 6th February 2012, 17:55   #202
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Default Re: Budget 2012-Is there a hefty one time tax on diesel vehicles expected?

Today, there was a quarter of a page advert in the Chennai edition of the Hindu by TML quoting the news reports about the impending one time hike and TML "Buy Now- Pay from April offer" .i.e downpayment to be done today and EMI will kick in from April.

Don't know what this means?
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Old 6th February 2012, 21:53   #203
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

The auto industry is expecting this excise duty hike and since I work with a component maker, we are seeing this reflecting in our schedules. OEM's are ramping up diesel car production to the maximum possible to pile up stocks over this month and the next.

This is most probably coming, as the government is under a serious fiscal deficit for the current year and one of the main contributors to this being the fuel subsidy.
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Old 6th February 2012, 22:12   #204
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

This is from today's mint

If the discussions are starting now, will be there enough time for the Govt. to finalize anything before this year's budget?

Govt to start discussions on higher excise duty for diesel-run cars - Economy and Politics - livemint.com

-- Wind
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Old 6th February 2012, 22:42   #205
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by HighOctane View Post
Guys relax, IMO the tatas, M&M, Hyundais will make sure that Govt will not enforce additional duties on diesel cars. They will meet babus and warm thier hands and make sure they will not include this extra duties in this budget.
If Tatas and Hyundai can warm Govt Hands, Why not BPs, HPs, IOCLs, Shells and Reliance? As per Petro-companies claim, they are loosing X amount on diesel fuel. They should be happy with 80,000 or even 8,00,000 rupees as tax hike for diesel cars. This money goes to the govt for Subsidy and logically must go to the Oil companies (Assuming no corruption and Bribery here).

Quote:
Originally Posted by Vid6639 View Post
Govt. may want to start charging more for diesel cars but the auto companies will lobby against this strongly. Also I believe the diesel consumption by private cars is not even 1% compared to total diesel consumption. Don't remember the source but I think ToI had this.
1% or 50%, Govt will surely increase the Tax on diesels. All Govt cares is to notice a luxury common man uses and to heaviliy tax the same. Even if diesel consumption is 1 liter per year for diesel cars, Govt will still tax the same.

Auto Manufacturers care about us. They know who buys cars and who does not. They cannot expect a poor farmer to buy a 8 lac sedan. Govt does not care for the middle class and above. Can anyone tell me one facility that Govt is offering the Tax paying salaried middle class and above. All schemes are for minorities, Farmers et all.

Quote:
Originally Posted by shashank.nk View Post
I agree with DieselFan here. If at all the additional taxes are levied, Mahindra and Tata will be the worst affected. Maruti has also signed a deal to procure 1 lakh engines from Fiat. These 3 big players are more than enough to lobby, and ensure that the proposed tax is not implemented anytime soon.
Well, IMHO, If the tax is increased even by 1 lac+ for diesels, nothing is affected as far as the Industry is concerned. The Lower price of diesel is still lucrative. Example People aiming for a TFORT will end up buying an Innova V. People aiming for a Scorpio VLX will end up buying an SLE or an LX and so on till say about the 45-50 lac barrier. The hike even if by a couple of lacs, will not affect the Rolls-royce/Bently Aspirant or heck even a Q7 / LC200 Aspirant. This would affect only the sub 15 lac segment and people would end up buying the base model instead of the top model (Assume I aimed for the top of the line model). At the very least, the person would save more money and buy the variant he wished about 6 months/1 year later

Quote:
Originally Posted by Sridhar K View Post
Today, there was a quarter of a page advert in the Chennai edition of the Hindu by TML quoting the news reports about the impending one time hike and TML "Buy Now- Pay from April offer" .i.e downpayment to be done today and EMI will kick in from April.
Don't know what this means?
This is just a fast sales gimmick. Even if the tax structure is implemented, Monetary wise, TML does not lose or gain anything. The Customer pays the tax, directly to the Govt. TML is no way impacted / affected with this money. If the rule is implemented, Customer Benefits as he saves some money and TML Still benefits (a sale). Even if the rule is not implemented, TML does not lose anything, as it already got the money (a sale).

Quote:
Originally Posted by fiat_tarun View Post
The auto industry is expecting this excise duty hike and since I work with a component maker, we are seeing this reflecting in our schedules. OEM's are ramping up diesel car production to the maximum possible to pile up stocks over this month and the next.
This is most probably coming, as the government is under a serious fiscal deficit for the current year and one of the main contributors to this being the fuel subsidy.
Quick Question - What do Auto Majors lose by this in the form of money ? Customer pays the tax directly to the Govt (Companies do not have to pay from thier pocket). Whether the Car is manufactured in Jan or Feb, the duty / tax would apply at the time of registration (april 1st).

Last edited by scopriobharath : 6th February 2012 at 22:56.
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Old 6th February 2012, 23:04   #206
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Quote:
Originally Posted by scopriobharath View Post



Quick Question - What do Auto Majors lose by this in the form of money ? Customer pays the tax directly to the Govt (Companies do not have to pay from thier pocket). Whether the Car is manufactured in Jan or Feb, the duty / tax would apply at the time of registration (april 1st).
The government is going to increase excise duty. This is paid when the company invoices to the dealer. So expect all dealers to be flooded with diesel cars over the next 2 months (which they will gladly take anyway)!
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Old 6th February 2012, 23:56   #207
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by fiat_tarun View Post
The government is going to increase excise duty. This is paid when the company invoices to the dealer. So expect all dealers to be flooded with diesel cars over the next 2 months (which they will gladly take anyway)!
I did not understand

If an item costs Rs 100. If the duty post budget is Rs 20, the new item cost would be 120. Customer is going to pay the extra 20.

It is NOT like an item costs Rs 100. Profit on that item is 50 Rs. Company pays 20 out of 50 made, so profit is reduced.

Whether manufactured now or later, company is getting the same money. Anyway, pls tell me what is the company's benefit on this.
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Old 7th February 2012, 00:17   #208
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

^^ The company pays excise duty when it invoices the car to the dealer. So say the government decides to tax diesel cars by 80k which will most likely be effective from the new financial year (1st April 2012).

The company has already produced cars over the previous 2 months and has invoiced these vehicles to their dealers paying the current excise duty. So effectively the vehicle invoiced to the dealer post 1st April will come under the new excise regulations.

When the vehicle is invoiced to the customer, excise duty has already been paid. So if the tax does come into effect post April, if a dealer has a car from his March stock you will be able to buy at the old price.

The company has nothing to gain or lose directly if excise duty goes up, but they will indirectly lose as sales will drop post the increase. The rationale behind boosting production and stocking now is to maximize sales as they can sell these cars even post April easily (without discounts, etc). If this is implemented, you can imagine the rush to buy diesel cars at the old prices, which is what the companies are trying to cash in on. So expect wonderful Q4 results from the top OEM's..!

Last edited by fiat_tarun : 7th February 2012 at 00:21.
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Old 7th February 2012, 16:38   #209
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by scopriobharath View Post

Well, IMHO, If the tax is increased even by 1 lac+ for diesels, nothing is affected as far as the Industry is concerned. The Lower price of diesel is still lucrative. Example People aiming for a TFORT will end up buying an Innova V. People aiming for a Scorpio VLX will end up buying an SLE or an LX and so on till say about the 45-50 lac barrier. This would affect only the sub 15 lac segment and people would end up buying the base model instead of the top model (Assume I aimed for the top of the line model). At the very least, the person would save more money and buy the variant he wished about 6 months/1 year later
What i meant to say was the auto industry will be hit by reduced demand. The situation is a little tricky, a major hike say 1 lakh plus would mean many diesel car aspirants would now settle for a cng car. I'm talking about the 5-8 lakh segment.

How many of the public do you see buying the top-end ? Its only us enthusiasts and those who understand the need for safety who opt for the top end. Now they may have to settle for the mid-variant. Agreed.

What about those who wanted the mid or low variant in the first place ?
These people will have to go a segment down and settle for a CNG car may be. I'm talking about those looking at the Figo/Beat base or mid variant will now have to go for a Wagon-R CNG. This will take away a lot of Figo and Beat diesel sales. In case of Tata's and Mahindra who get major revenues through diesel car sales, they'll be more affected.

Last edited by shashank.nk : 7th February 2012 at 16:40.
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Old 7th February 2012, 17:24   #210
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by shashank.nk View Post
What about those who wanted the mid or low variant in the first place ?
These people will have to go a segment down and settle for a CNG car may be. I'm talking about those looking at the Figo/Beat base or mid variant will now have to go for a Wagon-R CNG. This will take away a lot of Figo and Beat diesel sales. In case of Tata's and Mahindra who get major revenues through diesel car sales, they'll be more affected.
I think you are forgetting something here, still petrol cars will be available at say 1.8L to 2L lesser prices if we go by that the govt will impose the extra 80k on diesel variants this budget.

May be mileage is less for petrol but when you see the savings of 2L rupees that it self will be huge buying decision.
And people who prefer cng are not the ones who even think of diesel/petrol car in the first place. So cng buyers are entirely a different set of people who use cars only for city commuting.
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