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Old 7th March 2012, 12:23   #226
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by gkrishn View Post
----snipped-----
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.

Look at your coverage.
and then put up a small capacity diesel genset for each tower.
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Old 7th March 2012, 12:23   #227
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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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.
When there is no power, the mobile towers are operated by generators powered by diesel thats the reason they are the biggest consumers of diesel.
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Old 7th March 2012, 12:26   #228
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by sgiitk View Post
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!
Well the problem with this nation is that any corrective action is termed as "too late", and then we come up with half assed measures.

Soon it will become too late to deregulate the Petrol and Diesel fuel prices (even though we might have reduced poverty and unemployment and per capita income higher than BENELUX / Scandinavia countries) - because by then everyone would've become so much used to the govt interfered prices.

Though don't take my post as outright opposing yours - Higher tax on diesel vehicles is justified, because as I earlier said - low priced diesel is not for running Fortuners, but for running trains and buses.

The only thing is that till now Auto industry was doing it (via pricing for their profits), now Govt will do it via cost.

So my point was that situation will not change that much.
The car makers who have invested in diesel lines will no longer make excessive margins - so as to bring the price back to "pre-tax" levels.

Diesel and Petrol prices - same
Diesel and petrol vehicle prices - same
So what change will happen?

Last edited by alpha1 : 7th March 2012 at 12:28.
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Old 7th March 2012, 12:39   #229
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by Marlon View Post
" Passenger Vehicles use just 1% of Diesel " according to President & MD of Ford India



'Passenger vehicles use just 1% of all diesel' - The Times of India
The automakers are just opportunistic people, they will say so many things here in India. But look at their home country America, how many diesel cars do they sell. Almost negligible. Just because diesel is expensive in US by 20 to 25 cents, they very well know unless there is an huge demand they will not venture in diesel variants.

The automakers are just trying to cash in on the demand and it is for diesel engines in india. And to prove a point they will give any statistic.

The real issue is diesel subsidy, which has to be dealt with ultimately. Taxing new diesel cars will not solve the problem nor diesel dual pricing will. But at the same time if the govt. (this current one or the next ones to come later ) wont check and discourage the demand for diesel, ultimately it will lead to a point where they have to take drastic steps.

Diesel is subsidized for the poor and its becoming increasingly popular after they deregulated petrol, now shouldn't they deregulate diesel too. But tough political decision !

I don't see any harm or any major consequences if they do introduce a new tax for diesel cars. People who still can afford diesel cars will buy them.

Regarding automakers, they can still sell petrol cars and diesel cars at the same time. Most of the automakers invest in diesel technology in India not just to make diesel engines for India alone. Its pure outsourcing just like any manufacturing industry, they would export diesel cars still to the outside world.

Any one wanting a car will still buy it depending on affordability be it petrol or diesel.
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Old 7th March 2012, 13:18   #230
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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
The automakers are just opportunistic people, they will say so many things here in India. But look at their home country America, how many diesel cars do they sell. Almost negligible. Just because diesel is expensive in US by 20 to 25 cents, they very well know unless there is an huge demand they will not venture in diesel variants.

The automakers are just trying to cash in on the demand and it is for diesel engines in india. And to prove a point they will give any statistic.

The real issue is diesel subsidy, which has to be dealt with ultimately. Taxing new diesel cars will not solve the problem nor diesel dual pricing will. But at the same time if the govt. (this current one or the next ones to come later ) wont check and discourage the demand for diesel, ultimately it will lead to a point where they have to take drastic steps.

Diesel is subsidized for the poor and its becoming increasingly popular after they deregulated petrol, now shouldn't they deregulate diesel too. But tough political decision !

I don't see any harm or any major consequences if they do introduce a new tax for diesel cars. People who still can afford diesel cars will buy them.

Regarding automakers, they can still sell petrol cars and diesel cars at the same time. Most of the automakers invest in diesel technology in India not just to make diesel engines for India alone. Its pure outsourcing just like any manufacturing industry, they would export diesel cars still to the outside world.

Any one wanting a car will still buy it depending on affordability be it petrol or diesel.
The automakers cater to the needs of the customer, in Europe half of all luxury cars are diesel, 95% of BMW 7 series are diesel in UK where diesel is expensive. Diesel technology is gaining acceptability in the US also where the Germans have introduced 50-state legal diesels, the issue was that people hated to fuel up alongside trucks, with wider availability of diesel bunks, that taboo has gone.

Petrol cars are just not as fuel efficient as diesel cars and if hybrid is the way to go, there are associated environmental costs which are hidden and conveniently ignored. The advances in diesel technology mean that people have gotten used to 20kpl mileage in full size cars. The issue with diesel pricing in India is that like everything else that is subsidised, it creates a sense of worthlessness and entitlement.

Diesel car owners bet on the right horse with their purchase, with today's fuel costs if you drive 20k a year you can recover the cost of the purchase within 2 years, not to mention that petrol cars are hardly in demand in the used car market. The running cost of a Jetta diesel is less than a petrol hatch which cost about 1/4th of it, this means that no one in his right mind is going to put money into an expensive white elephant which doubles up as a depreciation disaster, most petrol sedans fall into this category.
The government will face a lot of pressure from foreign car makers if they try this tax tactic, we had the German diplomats defending full size SUVs made by German brands, when they were called fuel guzzlers.
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Old 7th March 2012, 13:46   #231
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Diesel car owners bet on the right horse with their purchase, with today's fuel costs if you drive 20k a year you can recover the cost of the purchase within 2 years, not to mention that petrol cars are hardly in demand in the used car market. The running cost of a Jetta diesel is less than a petrol hatch which cost about 1/4th of it, this means that no one in his right mind is going to put money into an expensive white elephant which doubles up as a depreciation disaster, most petrol sedans fall into this category.
The government will face a lot of pressure from foreign car makers if they try this tax tactic, we had the German diplomats defending full size SUVs made by German brands, when they were called fuel guzzlers.
Sir, Who is against diesel technology, I never said that. The above calculation you are making because you take the price of subsidized diesel into your calculation when comparing petrol vs diesel economics. In other countries there is no subsidy, whatever each fuel sells at, is at its market price and in the end customer's decision to go with petrol or diesel. Your above statement is based solely on the price difference between diesel and petrol alone. For mileage per liter diesel wins no doubt there. But if you factor out the savings you get because of subsidy on diesel I am pretty sure your calculation of 2 years will move to 3 years or more.
Even in used car market diesel car is more popular because of subsidized diesel price and of course better mileage too, but better mileage is a characteristic which is good no denying that.

If diesel is so very fuel efficient why don't they encourage diesel mopeds and bikes, even more mileage can be achieved right. Govt. can ban all petrol vehicles and only promote diesel vehicles as they will give more mileage and so less consumption of diesel. But its not that way, diesel technology is expensive, complex to maintain and hence makes more sense for cars, SUVs or trucks where the miles they clock are more compared to a bike or a moped or a small city car. Diesel is used in heavy vehicles because of its torque characteristics. So buying SUVs or manufacturing them or selling them should be based on diesel advantages and efficiency instead of subsidized prices of diesel.

Last edited by samsan02 : 7th March 2012 at 14:02.
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Old 7th March 2012, 13:49   #232
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by mayankk View Post
Look at your coverage.
and then put up a small capacity diesel genset for each tower.
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Originally Posted by sabsubs View Post
When there is no power, the mobile towers are operated by generators powered by diesel thats the reason they are the biggest consumers of diesel.
the article mentioned that, because they don't get clean power. the mobile towers are run on generators 100% of the time to ensure good signal quality. well now what, we will be blamed for using mobile phones?
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Old 7th March 2012, 14:37   #233
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by alpha1 View Post
Soon it will become too late to deregulate the Petrol and Diesel fuel prices (even though we might have reduced poverty and unemployment and per capita income higher than BENELUX / Scandinavia countries) - because by then everyone would've become so much used to the govt interfered prices.
......
Diesel and Petrol prices - same
Diesel and petrol vehicle prices - same
With a Govt comprising of spendthrift Nehruvites do not expect rational actions. They forget the basics - if you want to spend on social justice measures you must first earn the dough. Otherwise there are only two options print money (with all the damages) or sell the family silver.

In many countries (GB, CH, D, USA etc) diesel is priced marginally higher than petrol. One logic is that the calorific value of diesel is higher so should cost more.

As for vehicle prices Diesel vehicles will cost a bit more, heavier suspensions, starters, batteries, more rugged engines, etc.

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Originally Posted by samsan02 View Post
...

The real issue is diesel subsidy, ....

Diesel is subsidized for the poor and its becoming increasingly popular after they deregulated petrol, now shouldn't they deregulate diesel too. But tough political decision !
What subsidy. The total 'take' in diesel through taxation at various levels is more than the so called subsidy. Kerosene and Domestic LPG are subsidised but not diesel.

Petrol deregulation is a joke - all the time the oil cos want mama's permission.

Diesel deregulation is an economic necessity.

What fraction of diesel is actually used by the poor farmers. They can be compensated through direct cash subsidy. (aadhar provides the basis, that is why the babus and mantris do not like it) I have a feeling that the bulk of diesel is consumed by the rich farmers who also pay no Income Tax.
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Old 7th March 2012, 15:03   #234
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

But the problem of the subsidy being used by car owners in addition to the poor will be addressed by increasing taxes right? The govt can easily calculate the amount they stand to lose for each car running on diesel engines with a monthly running of 1000 kms ( which most number of people do I guess). They can factor in for global oil price variations too. And lets say this figure comes out to Rs 50k for a small hatch ( returning higher FE) and 100k for a MUV/SUV. This can be charged upfront in terms of taxes. So this effectively negates the losses and would in all due probabilities add to there coffers in terms of interest earned. This figure can be revised annually in case the global prices change drastically. I don't see this failing.

The Automakers will still sell there cars because a buyer will buy the car, petrol or diesel in any case.
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Old 7th March 2012, 15:13   #235
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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If diesel is so very fuel efficient why don't they encourage diesel mopeds and bikes, even more mileage can be achieved right. Govt. can ban all petrol vehicles and only promote diesel vehicles as they will give more mileage and so less consumption of diesel. But its not that way, diesel technology is expensive, complex to maintain and hence makes more sense for cars, SUVs or trucks where the miles they clock are more compared to a bike or a moped or a small city car. Diesel is used in heavy vehicles because of its torque characteristics. So buying SUVs or manufacturing them or selling them should be based on diesel advantages and efficiency instead of subsidized prices of diesel.
Diesel has its uses, don't get worked up about the users, mopeds and bikes on diesel? Care to explain where I mention that? The usage of diesel for personal transport is here to stay, no need to ban petrol if you misread my post, low running justifies petrol, especially in cases where short trips are the norm. Diesel technology requires fine tolerances, so the costs will be higher, complications apart, new age petrols are not all that much cheaper than their diesel counterparts.

I stick with my stand about betting on the right horse, I wrote earlier on in this thread that not even a handful of family members had bought a petrol in 2 decades, it was quite clear early on that petrol was uneconomical. Its not a new phenomenon.
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Old 7th March 2012, 15:20   #236
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Even if they charge diesel vehicles with higher initial taxes, the oil companies will keep cribbing.
The problem is with the government. Easiest thing is to de-regulate and let the oil companies manage themselves. The govt is trying to pull wool over people's eyes with all these manipulations.
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Old 7th March 2012, 15:54   #237
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Even if they charge diesel vehicles with higher initial taxes, the oil companies will keep cribbing.
Why? The Govt gives the diesel subsidy, not the oil companies - so why should it matter to them?
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Old 7th March 2012, 16:02   #238
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

@drmohitg; I think the exercise has been done. The Parikh committee has recommended a flat Rs.80,000 per diesel vehicle as the tax.
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Old 7th March 2012, 16:26   #239
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Another angle of looking at this upfront tax is that it is short term and not good for the long run. It's not a solution. Some quick calculation from a passenger car perspective.

Consider an average running of 1000km p.m
An average FE of around 17km/ lit.

Going by the above assumptions, the car is going to use about 58 L of diesel a month.

Now the current 'under recovery' on diesel is about Rs.12 / L. This makes the under recovery about Rs.700 per month per car and over a year about Rs. 8400.

If they charge an upfront tax of 80k, one has already paid the subsidy for about 9 years !!

Will the government keep subsidizing diesel for another 9 years..? Say tomorrow, they decide to free diesel pricing. A person who has bought a diesel car paying the upfront diesel tax will have to buy diesel at the market rate. It's a double whammy !

Ideally diesel pricing should be freed, but we all know the government cannot do that with the way the political system works. This is definitely a tricky situation to be in for the government.

We must ask ourselves, what would we do if we were in Pranab's situation and you need to keep most people happy (since it's impossible to please all).

Last edited by fiat_tarun : 7th March 2012 at 16:34.
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Old 7th March 2012, 16:27   #240
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Diesel has its uses, don't get worked up about the users, mopeds and bikes on diesel? Care to explain where I mention that? The usage of diesel for personal transport is here to stay, no need to ban petrol if you misread my post, low running justifies petrol, especially in cases where short trips are the norm. Diesel technology requires fine tolerances, so the costs will be higher, complications apart, new age petrols are not all that much cheaper than their diesel counterparts.

I stick with my stand about betting on the right horse, I wrote earlier on in this thread that not even a handful of family members had bought a petrol in 2 decades, it was quite clear early on that petrol was uneconomical. Its not a new phenomenon.
You yourself are telling now low running justifies petrol, but you gave an example of a high running 20k kms per year which is high and highlighting diesel over petrol. So no one is countering your argument and debating if petrol is better over diesel. Because diesel has more efficiency it makes more sense to go for it when your running is high.

Yes indeed you took the right decision because your running is high. But at the same time if the govt. is asking you to pay up tax upfront which you would negate by using the subsidized diesel over the years, then whats wrong in that.

Petrol got deregulated and its mostly used for private use in cars and bikes. When they pay now market driven prices for petrol then whats wrong in asking diesel car buyers (private vehicles) to pay upfront in the form of a tax. You are being asked to pay the tax upfront on the subsidy you would enjoy.

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Ideally diesel pricing should be freed, but we all know the government cannot do that with the way the political system works. This is definitely a tricky situation to be in for the government.

We must ask ourselves, what would we do if we were in Pranab's situation and you need to keep most people happy (since it's impossible to please all).
Very well said, ideally it should be freed. Yes its a tricky situation even after additional tax what is the guarantee that future govt. wont fully deregulate diesel.

Last edited by samsan02 : 7th March 2012 at 16:54.
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