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Old 17th March 2012, 12:47   #31
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

If I have to buy a new S class in Bangalore that manufacturer wants to sell for 70L, I have to have a pre-tax income of 170L!!

Approx breakup:
60L (income tax on 170L)
20L (27% excise duty on 70L)
20L (20% roadtax + insurance, etc.)
70L (money to mercedes)

Way to go!
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Old 17th March 2012, 13:42   #32
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- I do not quite agree with the sigh of relief by the manufacturers that no penal tax on diesel engines has been announced , the topic has been left open in the budget itself and as everyone knows it is a recurring talking point which prevents more investment in capacity expansion
- I am surprised that no one is talking about the lack of any coherrent policy which encourages investments in setting up new manufacturing facility . While the tax on imported cars is laudable , where is the policy which encourages a Merc, BMW, Audi to set up manufacturing facilities in India and invest towards growing the market ? Thinking from these guys perspective they can very well afford to shunt out the India market since their returns are peanuts and the potential is also chicken feed as compared to roaring markets like China and recovering markets like US despite whatever noises we make about Shining India !! Its a bit unrelated but we have already seen how Apple has completely ignored India without losing any of its sheen so I guess if we are humbug about our importance of being a market it won't work especially in the luxury segment. Why would a company invest billions when its exposed to policy hazards and govt is prone to being a socialist? Well our loss would be losing out on technology, we are a long way off in that game already
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Old 17th March 2012, 14:22   #33
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

Quote:
Originally Posted by diffsoft View Post
If only the 2G auction had been conducted with integrity, we would have been able to avoid all these increases
Can't say.
Auctioning natural resources might actually end up pinching the end user, i.e commoners like you and me.
Look at the way 3G services are priced now. It's way too costly.
Reason: Over-enthisiastic bidding in the auction.
The gigantic figure of the 2G scam is based on the presumption, that 2G auction would have netted a much higher price,
since 3G auction brought in around 50K crore.
If 2G was auctioned and companies had paid as high as they did for 3G,
our monthly mobile bills might be 2 fold or 3 fold higher than what we're paying now.
I'm not saying the 2G allocation was without any irregularities. Auction being a solution to that is not entirely correct.

Imagine what will happen if Supreme court orders the GOI to auction every natural resource or license required by
the Pvt. Sector to sell/service in India?
Our monthly expenses will increase by multiple folds.

Last edited by Daewood : 17th March 2012 at 14:52.
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Old 17th March 2012, 14:48   #34
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

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Originally Posted by Hayek View Post

But it's not too bad - may be VW will now take the hint and bring in the the Polo with a 1.2 TSi engine instead of sticking to the 1.6. And a Vento or Jetta with a 1.4 TSi sounds good as well (3% excise saving is nothing to sneeze at).
I couldn't agree with you more, the TSI technology is already used in the Skoda and Volkswagen does not provide this in the Indian polo as yet. We Indians will also get a world class product. With the Indian rupee sliding in value thanks to our current a/c deficit VW will do well if they manufacture from here and export to the rest of the world.
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Old 17th March 2012, 17:52   #35
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A quote from the Luxembourg PM (president?) on euro crisis suits here.
"We know what to do, we just don't know how to get elected after we do it"
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Old 17th March 2012, 19:17   #36
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

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Originally Posted by unni_s View Post
If this is indeed true, it's really sad that govt. can allow such discriminating rules to be drafted that favour one set of manufacturers over another. I think a correct way to draft this rule would have been that capacities >1.6 to be taxed more with the assumption that these models would be performance oriented. And the fact that the actual capacities of most the above 1.6L cars are 1598, 1594cc it may just allow them to escape this new clause.
Otherwise, it means that the 1.6L is a dying category and I am going to hold on to my Fiesta 1.6 as pretty soon you'll find it tough to get a decent affordable 1.6 in the market.
The 3% difference between 24% to 27% is not new and was there even before the budget but it was more in Fixed form of Rs 15000/-. Instead of fixed amount it has been made variable in the budget.
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Old 17th March 2012, 20:36   #37
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Quote:
Originally Posted by Daewood View Post
Can't say.
Auctioning natural resources might actually end up pinching the end user, i.e commoners like you and me.
Look at the way 3G services are priced now. It's way too costly.
Reason: Over-enthusiastic bidding in the auction.
OT
IMHO Auction is the best way to judge the real intrinsic value of any asset.
Tell me any other method which suits the highly-doubtful Govt-corporate dealings.
The over-enthusiastic biddings by the highly paid analysts and consultants show that even the highest paid executives can be wrong and fall under herd mentality. If you say Auction is not the right way then how would you explain the rational behind the huge money paid by companies to buy the stake in companies which were successful in bidding. If you see, only the govt was appearing as looser in the whole 2G bidding process.
Now as regards personal expenses, their is something called 'demand-supply', 'low cost-high volumes' etc. and tell me don't we all feel as if it is our birth right to expect mobile tariff to go down, and won't mind keeping two-three connections just because they are cheap. We all were happy with single connection earlier.
Now look at the cycles in Aviation, DTH, Mobiles, Real Estate, and what not. Its proven time and again, if your fundamentals are not right, you are bound to fail sooner or later. Same goes even for cars also.
It has been proved many times in history that the human beings make silliest of mistakes while in groups and we don't learn by our mistakes. Look what happened in Singur and many places in India.
If one says companies are loosing in all this then look at the values at which their shares change hands. All in all one can easily observe that due to wrongdoings of few 100 people, billions of people are suffering and will continue to suffer. One can also see that 'There are No Free Lunches' as in the name of cheap air tickets, mobiles, etc. when the company ultimately makes big losses, the govt or banks have to come to their rescue and where the Govt gets money from is known to everybody.
Just my various thoughts.

Last edited by carwatcher : 17th March 2012 at 20:44.
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Old 17th March 2012, 20:49   #38
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

For Petrol variants, expect a lot of innovations by the OEM marketing department to negate the impending Rs 6-15k estimated price rise, stretching from the Nano's to the MANZA's.

methinks in the coming months: interest rates on car loans will soften, dealer sales schemes will become more aggressive (as OEM's will squeeze dealers more to part more of their dealer commission), trade-in values & used car schemes (for OEM run used car businesses) will be upped if you want to exchange your car for that particular OEM's brand.

Freebies (in terms of free accessories) from dealer end may come down in the petrol segment as the dealers will be stretched to push all the sales schemes.
In fact with the fear of a sales slowdown hanging like the sword of Damocles over OEM's heads, i wouldn't be surprised that after adding up all the aggressive sales schemes your new set of wheels' pricing comes very close to pre-budget prices !
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Old 17th March 2012, 20:53   #39
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

Quote:
Originally Posted by androdev View Post
If I have to buy a new S class in Bangalore that manufacturer wants to sell for 70L, I have to have a pre-tax income of 170L!!

Approx breakup:
60L (income tax on 170L)
20L (27% excise duty on 70L)
20L (20% roadtax + insurance, etc.)
70L (money to mercedes)

Way to go!
Although your figures require some adjustments, what your message is pretty bang on the target! Couln't agree more, Sir!

, but the basic premise of taxation is four- fold: a) It should not be exploitative; b) It should benefit those who pay it; c) It should benefit and add value to the society; and d) The tax collecting machinery should not be a self- serving organism in itself.

Apply these principles to taxation in our country, or for that matter most of the countries of the world, and what would be your take on the fairness of the system?
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Old 17th March 2012, 22:26   #40
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

Quote:
Originally Posted by Yeldo View Post
the basic premise of taxation is four- fold: a) It should not be exploitative; b) It should benefit those who pay it; c) It should benefit and add value to the society; and d) The tax collecting machinery should not be a self- serving organism in itself.

Apply these principles to taxation in our country, or for that matter most of the countries of the world, and what would be your take on the fairness of the system?
It does meet all those 4 things, to varying degrees though.
The question really is , how much inter-dependency do tax collections have. For example, we pay varying degrees of road tax, this is because every state government has been given authority to collect some taxes, besides what the central government think it is owed in taxes. So we get wide variation in prices across India owing to state taxes, as if people in Bangalore use much more roads (else why higher road tax), while Maharashtra adds octroi to the mix.

The key here is - these taxes are not directly related to the government providing a service or benefit - but to make up the government's income through other means than the ones it can charge for - so for example, if they run municipal transport at a loss ( the fares charged to users of public transport are insufficient compared to expense on public transport ), they raise the difference in expense vs collected fee through taxing other things , like cars, alcohol , apparel , gadgets etc - even though now the government is not providing anything for this tax in return, but is charging because it can ( misuse of authority - exploitation , as you mention ).

This is why I think governments should function like some companies do - utilize the business unit concept. Every arm/department should raise its own funds, and meet its expenses within that amount, not tap into other heads as the government does now. Now this does bring into question , what about services that don't or cannot generate funds - like the law enforcement, military , fire brigade ? Those can be taxed separately , as defence/police tax , etc while doing away with the "so you got money, I want some of it" income tax, and excessive collections to fund deficient departments.

The downside , some services will cost more , for example , public transport buses may have to raise fares to meet their expenses, but now only those who use it , pay for it. Similarly, those being taxed for things they do not use, will be happy at not being taxed unfairly. Will the government accept this ? Will it even work, will the people accept paying more for the services they use, rather than rely on the taxed funds from other collections to subsidize them ? At least we will have less bureaucracy and babus to mishandle the funds and paperwork , bringing efficiency and thus savings.
Will fair taxation even be acceptable to the masses , when they might have to pay more for some things, but also less or nothing for some other things - perhaps in the end working out their total annual tax outflow is less ?

Quote:
Originally Posted by souravc View Post
- I do not quite agree with the sigh of relief by the manufacturers that no penal tax on diesel engines has been announced
Why should diesel be taxed more than petrol, that is artificial escalation of pricing which does not bode well. Taxing as a means of discouragement is a bad policy, even for alcohol and tobacco. It it's harmful , ban it, else let is be laissez faire and let whoever's providing the service run the show, not collecting taxes where no duty/service is performed in lieu of the collection.
Diesel is more efficient, but comes with added engineering complexity and cost over petrol, let the matter end there. If the issue is of difference in fuel tax, equalize that than continue to guillotine more sacrificial goats. there is no subsidy on diesel, we pay a bit more than market cost already, it is petrol that is highly taxed for being a rich man's fuel (tell that to the millions of two wheeler uses , no - not the SBK owners, the usual small bike and scooter owners who use two wheels because they can't afford to buy/run a car ).
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Old 17th March 2012, 23:00   #41
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Ex-Showroom Price Gujarat
4x2 Manual
21,19,556

4x2 Auto
22,02,555

4x4 Manual
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Old 18th March 2012, 01:02   #42
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Originally Posted by Ricci View Post
Why should diesel be taxed more than petrol, that is artificial escalation of pricing which does not bode well. Taxing as a means of discouragement is a bad policy, even for alcohol and tobacco. It it's harmful , ban it, else let is be laissez faire and let whoever's providing the service run the show, not collecting taxes where no duty/service is performed in lieu of the collection.
Diesel is more efficient, but comes with added engineering complexity and cost over petrol, let the matter end there. If the issue is of difference in fuel tax, equalize that than continue to guillotine more sacrificial goats. there is no subsidy on diesel, we pay a bit more than market cost already, it is petrol that is highly taxed for being a rich man's fuel (tell that to the millions of two wheeler uses , no - not the SBK owners, the usual small bike and scooter owners who use two wheels because they can't afford to buy/run a car ).
This is not the thread for a debate of the pros and cons of taxing diesel, I think there are quite a few threads on the topic - it was just a comment on the fact that the budget does not make any promise of not levying punitive taxes on diesel / diesel vehicles
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Old 18th March 2012, 01:10   #43
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

Increase in service tax is aright, if we consider the payment is one time.

Pranab babu failed miserably in ensuring the inflow of money to common man is increased. With mere increase in 20,000 in tax slabs does not make a difference et all. Infra Bonds tax exemption is rolled back, which brings every salaried person back to square one and decrease in PF ROI only gives the the person to start way behind the starting line.

Add to it the misery that our RBI Governor gives, with Interest rates never falling down.

If the above conditions were taken care, guess those people buying vehicles which are <1500 cc would have been happy. With such a pathetic budget, we have ourselves to blame for electing these fools.

Last edited by deepakchiniwal : 18th March 2012 at 01:12.
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Old 18th March 2012, 01:17   #44
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@Souravc
ok, agreed on that front. But I think that the non-implementation of diesel-specific vehicle tax indicates the interest groups - SIAM , taxi operators, wield sufficient influence, so the government might well be considering slow de-regularization of diesel prices. The PM's hints on biting the bullet might be just that hint. The Parikh committee suggestions and the car category based levies suggestions were presented so strongly, it was like agiven they would be implemented. At least the government has not done so - whether realizing the futility or due to vote bank and industry lobbying, we don't know for sure.

The budget is no relief for middle class. The overall expenses are going to rise, due to service tax and excise on several items. Contrary to what the governmen thinks, this will increase inflation. The Indian car market will see slow growth, mainly due to the salary rises enough for those who get them in this year (double dip recession ) than any saving out of tax outflow to counter the increased expenses. The government with one hand giveth, but it taketh with two hands ( ok, that sounds bad in English ! ).

Last edited by Ricci : 18th March 2012 at 01:23.
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Old 18th March 2012, 03:31   #45
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Default Re: The 2012 Budget & the Indian Car Scene : All you need to know

@GTO

Thanks for the To-the-point summary, it saved me a lot of time!

Secondly, you missed out info about the hiking two-wheeler excise duty from ten to twelve percent, which will in turn raise prices for bikes as well.

Source
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