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Old 7th February 2012, 17:37   #211
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by samsan02 View Post
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.
True, i missed that point completely.In the same segment the difference between petrol cars and diesel IF the 80k additional tax in brought in will be about 1.5-2lakhs. There won't be too many diesel buyers. But those who've enjoyed the lower running costs of diesel will find it very tough to shift to a petrol, but that's a completely different discussion.

What happens to the 'diesel only' manufacturers like 'Mahindra' and mainly diesel car sales companies like Tata, VW, Skoda, Fiat etc
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Old 7th February 2012, 17:48   #212
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What happens to the 'diesel only' manufacturers like 'Mahindra' and mainly diesel car sales companies like Tata, VW, Skoda, Fiat etc
I, for one, will be happy. We will see small and efficient Multiair, TSI and TFSI engines coming in. But, will the government ensure better quality petrol for these engines to run, or will it simply continue to try to solve the wrong problems?
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Old 7th February 2012, 18:02   #213
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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What happens to the 'diesel only' manufacturers like 'Mahindra' and mainly diesel car sales companies like Tata, VW, Skoda, Fiat etc
Lets not worry about the manufacturers like mahindra, management should have thought about it. If not then they will have to re invent the wheel again, I don't think getting petrol engines will be that difficult for any such manufacturers. But yes SUV segments are mostly ruled by diesel and it makes sense too but I feel SUV buyers are a different segment altogether they shouldn't get pinched by a 1L more price tag.

Mahindra will still sell to fleet companies like Meru as Diesel is still economical for them even in long run, worse case we may expect a fare increase rise for these cabs.

Mostly passenger car segments like hatch,sedan in below 9L category will get affected. But manufacturers will still sell more number of petrol cars if their demand shoots up. And fitting a petrol heart instead of diesel heart wont do much changes to the assembly line. I read somewhere Nissan is already equipped to avoid any impact. Yes car manufacturers will see a decrease in sales and in margins to some extent.

But lets face it, we can't continue to be ignorant of the fiscal deficit the fuel subsidy already has created.
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Old 7th February 2012, 18:36   #214
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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What about those who wanted the mid or low variant in the first place ?

In case of Tata's and Mahindra who get major revenues through diesel car sales, they'll be more affected.
People who want a base model would have to go one segment lower. People who target the cheapest diesel car would have to stretch the budgets or go in for a petrol or Register the diesel as a commerical vehicle.

When so many people in TBHP are discussing about the Diesel tax on cars, I am sure Mahindra and Tatas would have people who are paid through the nose and are understanding the markets.
I am really confused why these people have not pointed out this tax affecting the buyers and prepared the companies by having a petrol engine on standby. Example As someone pointed out, If i want a Petrol XUV or Scorpio, its not available. In fact i have a santro and used 40,000 kms in 5 years. for a similar usage, Petrol engine is sufficient.

Is it assumed that one who can afford a diesel can as well pay couple of lacs more ?
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Old 7th February 2012, 20:58   #215
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by samsan02 View Post
And fitting a petrol heart instead of diesel heart wont do much changes to the assembly line. I read somewhere Nissan is already equipped to avoid any impact. Yes car manufacturers will see a decrease in sales and in margins to some extent.

But lets face it, we can't continue to be ignorant of the fiscal deficit the fuel subsidy already has created.
Whether there is a huge fiscal deficit that warrants such a tax, i know not. Most of the loss reported by the oil companies could as well be book losses. There may not be a real loss in monetary terms.

They may not need many changes in their assembly line, but do they have petrol engines ready is the question.

Quote:
Originally Posted by scopriobharath View Post
People who want a base model would have to go one segment lower. People who target the cheapest diesel car would have to stretch the budgets or go in for a petrol or Register the diesel as a commerical vehicle.

When so many people in TBHP are discussing about the Diesel tax on cars, I am sure Mahindra and Tatas would have people who are paid through the nose and are understanding the markets.
Many diesel car buyers can certainly afford to own a petrol car, and not lose anything in doing so i guess. Its just the mentality of people, who don't mind paying a huge amount upfront, than pay everytime at the fuel station which makes them go for a diesel car even if their usage doesn't warrant one.

If the additional tax is brought in, it will ensure only those with a lot of running will go in for a diesel car.

I don't know what Tata's and Mahindra have planned to counter this, but i don't see them ready with petrol engines for immediate usage in their cars if needed.
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Old 8th February 2012, 00:38   #216
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Whether there is a huge fiscal deficit that warrants such a tax, i know not. Most of the loss reported by the oil companies could as well be book losses. There may not be a real loss in monetary terms.

They may not need many changes in their assembly line, but do they have petrol engines ready is the question.
I can understand your point, taxing again a diesel car will not solve diesel subsidy problem. As definitely few people will still buy diesel cars but those extra lakhs wont be that huge.

The intention of the govt. is to discourage people to buy a diesel car and so the consumption of diesel is reduced to some extent. There will still be fuel subsidy bill for the govt. but that way it has no choice and it can still sell diesel subsidised for farmers and the commercial vehicles.
But in a way at the same time it encourages people to go for petrol instead and so when petrol is already deregulated the owner still pays market price for that. All in all the no of new car owners will still buy cars but mostly petrol.

Regarding car makers being ready with petrol engines, thats something which they would have anticipated long back. They are here to sell cars doesn't matter what they sell. 1 or 2 bad quarters wont make them bankrupt, apart from share price fluctuations in the stock market.

Cars are made based on forecasted demand, excess inventory will get cleared in the subsequent months. See Maruti, 6 to 9 months waiting period for dezire or swift diesel. Do you think Maruti has already planned production schedule for those cars or has inventory ready, I dont think so.

Lets say If the capacity is to meet a quarter worth of orders then changes in business dynamics in a current quarter will automatically change the master plan for the next quarter.

Ideally the govt should have deregulated both petrol & diesel at the same time. Most countries do that. Its a tough call now thou, lets ee what happens.
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Old 8th February 2012, 01:16   #217
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Guess we are focusing too much in this thread on customers feeling the pinch, petrol engines selling more, Indian companies getting affected etc!

Why are we NOT discussing or even thinking about the companies reducing their premium over diesel variant? We all know that the companies are milking the customers when it comes to diesel variants charging premiums from over 1L to 1.3L or so in some cars. If they want to still leverage on the diesel variants sales, then they can bring down the premium to 60K or so. And if assume that the tax is going to be a 15% on the ex showroom price, bringing down the premium on diesel variants to 60K can knock a total of 70K off the OTR price [in case of a car with 1.3L premium on diesel variant compared to petrol model]? Shouldn't this ensure people are OK to buy diesel variants NOT feeling the pinch much ? I don't think manufactures being stubborn on the diesel variant premium is going to help them if the tax is implemented.

Edit::

For example, consider a diesel car with 5L ex showroom before the diesel tax is implemented. If 15% tax is imposed on it, then the diesel tax = 75,000/-

Now ex showroom price + diesel tax = 5.75L [For a car costing 5L before the tax implementation, they need to shell out additional 75K after the tax addition]

When the same diesel car is priced at 4.6L ex showroom by keeping the premium at 60,000/- over the petrol variant, 15% tax on 4.6L = 69,000/-

Now ex showroom price + diesel tax = 5.29L

That's roughly saving a total of 45,000/- by knocking off a 40% premium in the diesel pricing! So where a car ideally have cost 5L, the customer can buy it for an extra 30,000/- if the manufacturers are reducing their premiums. That should be a win-win situation!

Last edited by swiftnfurious : 8th February 2012 at 01:30. Reason: Adding "example" part
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Old 10th February 2012, 11:13   #218
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

And now M&M lets its displeasure known to the government about its daft idea of taxing diesel cars Additional tax on diesel cars will be a retrograde step: M&M - The Economic Times.

I am not even sure how they can implement such a policy. Specially the Tatas and M&Ms selling to the commercial transport and taxi segment. Even Maruti with its DZire will be adversely hit. Would there be a differentiation between commercial and personal vehicles in the diesel category? If yes, how can they guarantee that there will be no corruption during the buying process itself. Registered transport providers who use diesel vehicles for commercial purposes can then open a mini business by buying the vehicles first minus the additional tax and then selling it to private owners at a moderate profit who want the vehicle for personal use. Surely the government is about to open a pandora's box if they go this route.

Last edited by samarjitdhar : 10th February 2012 at 11:14.
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Old 10th February 2012, 11:54   #219
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Our budget this year ahs been postponed to march 14

" Finance Minister Pranab Mukherjee will present the budget for 2012-13 on March 16, the government announced Tuesday."

"The minister said the budget session will resume April 24 after an over three-week-long recess. The second part of the session will end May 22."

Now my doubt.
usually the budget was on the last day of feb and the new policies would come into effect by april 1 of the yearl.

But this year, the budget starts on march 14 and ends on march 28, hence when will be the new policies signed by the house?? That is, if an extra tax is implemented on the diesel cars, and it is forwarded to the higher committee, will it be sanctioned by april 1 (just a 3 day window is there) or will there be another month or 15-20 day gap???

New info.

(Naresh Trehan Chairman of CIIs National Committee on Healthcare discuss India Inc's expectations from Budget 2012.
Below is an edited transcript of his interview.)


Q: Do you believe that given the fiscal room that he has there is going to be any sort of a reduction in taxes or do you actually believe that we are going to see a hike in taxes especially on items like diesel vehicles, as well as in goods like cigarettes?
Memani: Yes, on diesel vehicles at least by what one reads and what's happening, that it's likely that it may come. Cigarettes are the favourite and come up every year. So I am sure they will not miss n it this year. I am not sure whether they will have room as much to reduce tax rates, but my sense is they would be well advised to preserve and not increase tax rates whether an indirect tax or on the direct tax side.

Last edited by rmk : 10th February 2012 at 11:57.
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Old 11th February 2012, 04:51   #220
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

I do not think the diesel tax would be on ex-showroom price. It would most probably be included in the central taxes.

Also, it can be levied in a more subtle manner : just scrap the lower excise duty bracket for diesel four-wheeler or worse, increase it.
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Old 7th March 2012, 07:42   #221
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

" Passenger Vehicles use just 1% of Diesel " according to President & MD of Ford India



http://timesofindia.indiatimes.com/b...w/12168837.cms
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Old 7th March 2012, 09:49   #222
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

^^ This is exactly how the automobile industry is lobbying against this tax on Diesel cars. A few weeks back Pawan Goenka came up with this theory saying if the price of diesel is increased by 0.75 paisa / lit., it will be equal to taxing new cars at 80k... or something like that.

The auto industry is very worried. If this happens, it's not that people will go buy petrol cars, but they won't buy cars at all..!

Last edited by fiat_tarun : 7th March 2012 at 09:50.
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Old 7th March 2012, 11:53   #223
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Diesel should be stopped for personal use.
Diesel subsidy is there for the purpose of public good and general public consumption (ppl who cannot afford to buy and run a CAR - even Alto), transportation etc.

So therefore only allow vehicles that are public carriers to be of diesel variant.

Any other measure like dual pricing of diesel, increasing tax on diesel vehicle etc only serves to dilute the real reason for diesel subsidy - and will also increase malpractices to circumvent the laws.
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Old 7th March 2012, 12:02   #224
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Diesel should be stopped for personal use.
Diesel subsidy is there for the purpose of public good and general public consumption (ppl who cannot afford to buy and run a CAR - even Alto), transportation etc.
How do you propose to achieve this noble objective - shut down assembly lines and factories, put thousands of workers on the street. It is too late for this option.

So the only option is what is being considered, tax diesel cars up front since the lower taxation cannot be done away with. After all are we not paying the OTT for registration. I am glad you agree that dual pricing is not possible. See what is happening with LPG!
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Old 7th March 2012, 12:20   #225
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

the real issue is actually the fiscal discipline of the state and the central government.

unless they tighten up their socks, these new tax avenues wont help the situation at all. a quick back of envelope calculation shows that the common man is taxed about 40+% of his income. And in return he gets practically nothing. no half decent public transport. no half decent police force. good for nothing public education, health services, etc etc.

this is more of a social issue. diesel cars are miniscule part of it.

some where read that the mobile towers are one of biggest consumers of diesel in the country. not really sure how they ended up there.
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