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Old 7th August 2017, 14:43   #616
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Default Re: GST effect on car prices?

Let me ask a very simple and basic question:

1. Should high-end cars like the 5-series, Jaguars and Range Rovers have become cheaper after GST implementation?

2. Should SUVs have become cheaper?

The answer to both questions is no. Because anyone who can afford a car in these segments would not be economically backward, and can certainly shell out 10-15% more in taxes.

They cannot reduce the cess on small cars as there are already too many vehicles on the road, contributing to congestion/pollution.

So in a way, aren't they just doing what they should have done in the first place? Just revert to pre-GST prices and ensure that luxury vehicles do not become less expensive to buy.

Not sure what's the problem with this move.
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Old 7th August 2017, 15:03   #617
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Default Re: GST effect on car prices?

Quote:
Originally Posted by AbhisheKulkarni View Post
Let me ask a very simple and basic question:

1. Should high-end cars like the 5-series, Jaguars and Range Rovers have become cheaper after GST implementation?

2. Should SUVs have become cheaper?

The answer to both questions is no. Because anyone who can afford a car in these segments would not be economically backward, and can certainly shell out 10-15% more in taxes.

They cannot reduce the cess on small cars as there are already too many vehicles on the road, contributing to congestion/pollution.

So in a way, aren't they just doing what they should have done in the first place? Just revert to pre-GST prices and ensure that luxury vehicles do not become less expensive to buy.

Not sure what's the problem with this move.
The issue here is the flip-flop decision making by the govt., and doesn't inspire confidence, especially if I was a foreign investor looking at India, or if I was a car buyer trying to make an informed purchase with my hard earned money.
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Old 7th August 2017, 15:07   #618
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Default Re: GST effect on car prices?

Quote:
Originally Posted by AbhisheKulkarni View Post
Let me ask a very simple and basic question:

1. Should high-end cars like the 5-series, Jaguars and Range Rovers have become cheaper after GST implementation?

2. Should SUVs have become cheaper?

The answer to both questions is no. Because anyone who can afford a car in these segments would not be economically backward, and can certainly shell out 10-15% more in taxes.

They cannot reduce the cess on small cars as there are already too many vehicles on the road, contributing to congestion/pollution.

So in a way, aren't they just doing what they should have done in the first place? Just revert to pre-GST prices and ensure that luxury vehicles do not become less expensive to buy.

Not sure what's the problem with this move.
My take on the questions.
1. the High end cars were exhorbitantly taxed compared to other markets to start with. So reducing them in itself was not a bad move.

Also just because somebody can afford 10% more doesnt mean you tax him 10% more.
GST was touted to be a single tax structure - with 4 different tax slabs. All of the products should be accommodated within the 4 slabs. Why dilute the essence of GST with cess/surchage and numerous other add-ons.
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Old 7th August 2017, 15:59   #619
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Default Re: GST effect on car prices?

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Originally Posted by ksameer1234 View Post
This is bad. The reason people somehow bought into GST was because it was told that while some things are becoming expensive, some are becoming cheaper as well. Now, the government seems to have decided that what has become expensive shall remain expensive while what has become cheaper shall be made expensive through random cess. This is totally against the spirit of GST.
How is one decision on expensive cars showing govt decision on everything ? I dont see the problem in higher taxes for expensive vehicles - especially when the net impact is zero compared to pre-GST
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Old 7th August 2017, 16:01   #620
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Default Re: GST effect on car prices?

Quote:
Originally Posted by ac-cobra View Post
The issue here is the flip-flop decision making by the govt., and doesn't inspire confidence, especially if I was a foreign investor looking at India, or if I was a car buyer trying to make an informed purchase with my hard earned money.
True. However, the decision to not provide respite for hybrids as opposed to full electrics was far more flawed than this fluctuation. Let's hope they correct that as well.

It seems like the decision makers do not want to be subject matter experts and just take idealistic decisions whilst squatting on the fringes.

It would have been so simple to distinguish between poseur hybrids (read: Maruti, Mahindra) and real hybrids based on just the distance which the car could be driven by using the electric power-train alone.

Quote:
Originally Posted by vigneshA View Post
My take on the questions.
1. the High end cars were exhorbitantly taxed compared to other markets to start with. So reducing them in itself was not a bad move.
Quote:
Originally Posted by vigneshA View Post
Also just because somebody can afford 10% more doesnt mean you tax him 10% more.
GST was touted to be a single tax structure - with 4 different tax slabs. All of the products should be accommodated within the 4 slabs. Why dilute the essence of GST with cess/surchage and numerous other add-ons.
Agreed. However, it was not desirable from a political perspective for cars that only 5% of the population could buy to have become cheaper, whilst cars that 95% (of the vehicle-buying people) could afford remained at-par or got dearer.

Such policies would not earn brownie points in the election campaign for 2019.

As far as taxation is concerned, in a skewed country like ours where the percentage of tax-paying population is hugely imbalanced, the rich (the ones who consider SUVs or Luxury cars) should have no reason to feel slighted.
A government has to make life better for the poor, and not the other way around. And this precisely was the motto of GST, that it would make the needs of the poor less expensive. So it doesn't serve them well to have luxury cars becoming cheaper, is my guess.

Wonder why the fluctuations though. They had so much time to consider the rates. That surely is a sign of general incompetence and flawed processes.

As for the point you mentioned about luxury vehicles being over-priced in our market as compared to others, I'd say that they get what they deserve for not investing in our country and importing CBUs. For those that have taken the effort to do so, read Volvo, Mercedes and BMW, the cost is close to being at-par for many models that are built/assembled here (if not all).

If you try to configure a M-Sport 330i on the BMW USA website with similar options/packs as the one that we have here, it costs $49,385 which translates to INR 31.5 lacs as per current exchange rate.

The M-Sport 330i in India costs 43.41 lacs - with an average discount of about 5-6 lacs (considering year-end, petrol model) - would be pretty close to the USA price (in showroom).

The Volvo S60 Polestar costs $61K in the US and costs just (for the package it offers) 53 lacs ex-showroom here.

However the point is that such a difference may not be prohibitive for a buyer shopping in this category.
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Old 7th August 2017, 16:54   #621
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Default Re: GST effect on car prices?

Isn't this cess itself just a temporary addition to the GST structure to compensate states for the next 5 years? If so, what will happen to the GST rates after that time? Are there going to be more GST rates added in future or will all cars be charged the same percentage of tax?

If the rationale for GST rates is to keep it on par with what was existing before, then i dont see any real reform. Its just a new name for the same tax. If this is the thinking that the GST council operates, then i wonder what will happen when petroleum products comes under GST. Will they again increase the maximum cess from 25% to 50% or something?
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Old 7th August 2017, 17:11   #622
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Default Re: GST effect on car prices?

Quote:
Originally Posted by AbhisheKulkarni View Post
Let me ask a very simple and basic question:

1. Should high-end cars like the 5-series, Jaguars and Range Rovers have become cheaper after GST implementation?

2. Should SUVs have become cheaper?

The answer to both questions is no.

Not sure what's the problem with this move.
The first problem is that you ask two questions then decide to answer it also.

Cars like the 5 series or anything else should have become cheaper when we were promised a streamlined tax system. Why single out luxury brands? other than jealousy, I can't think of any other reason. Why should small cars have lower tax rates, personal transport is all the same, Maruti or Mercedes, it is part of the traffic.

SUVs are popular because we live under a government racket, where we are taxed for buying cars that can survive the roads the government won't maintain despite taxes having shot up every year. Using your logic, the kwid should have been taxed higher, it gives an SUV feel.

The idea being discussed is an increase in cess, something this earth shattering reform promised to eliminate. Glad you won't let facts come in the way of your ideology.
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Old 7th August 2017, 17:26   #623
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Default Re: GST effect on car prices?

Going in this manner, GST would be nothing but another brand changing gimmick which has no advantage whatsoever The whole idea of GST being simple is going down the drain sooner or later if additional taxes like these are brought into picture every now and then. Nevertheless, automobile industry will be clueless when it comes into planning their strategies as the bureaucracy is showing its ugly face.

Last edited by bhp_maniac : 7th August 2017 at 17:28.
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Old 7th August 2017, 17:42   #624
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With daily changes in cess, tax rates and slabs, the automobile industry will resort to daily revision of prices of cars just like for petrol and diesel
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Old 7th August 2017, 17:58   #625
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Default Re: GST effect on car prices?

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Originally Posted by drashkum View Post
With daily changes in cess, tax rates and slabs, the automobile industry will resort to daily revision of prices of cars just like for petrol and diesel
And the opportunists playing around automobile stocks can make some moolah owing to the volatility of the market Jokes apart, it would be really interesting to see how the automobile industry would respond to these kind of daily changes to policies.

Last edited by bhp_maniac : 7th August 2017 at 17:59.
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Old 7th August 2017, 18:34   #626
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Default Re: GST effect on car prices?

Prices of vehicles above four metres, including SUVs, could go back to where they were before implementation of GST (Goods and Services Tax) as the government has proposed to increase the additional cess for these categories of vehicles from the current 15 percent to 25 percent (total taxation of 53 percent).

If you are looking out for a vehicle in the above category, you need to decide now, lest increase in prices will hit you. See the impact on Jeep Compass pricing!

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ACI
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Old 7th August 2017, 18:40   #627
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Default Re: GST effect on car prices?

Wasn't the maximum cess capped at 15%? I don't think its that easy to increase this ceiling unless they pass new legislations in the Parliament.

I think the Govt. should resist making such frequent tinkering. Businesses are taking decisions, chalking out strategies based on these new legislations. This is very unsettling.
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Old 7th August 2017, 18:49   #628
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Does anyone know when is this going to get implemented from? I am in the market for bigger sedan. Have prebooked my next generation verna. So i am a bit worried that i have to cough up more. Or else ill go and book a vento right away and get a delivery
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Old 7th August 2017, 19:08   #629
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Default Re: GST effect on car prices?

My comments from earlier (read 30th May) in the price difference of Tata Hexa XTA Delhi pricing. (The final difference was even more since Tata decided to correct their prices in the guise of GST)
Quote:
Originally Posted by r0nit7 View Post
That's a whopping 1.5L difference in final OTR price if the manufacturer passes on the entire benefit to the customers. Sounds too good to be true, right?!
Not sure, but I don't think the Govt would like to lose this much revenue and would surely come up with some way to make up the difference.
It seems that the Govt has realized their lapse from earlier after only just 1 month (speed of light in govt work speed) of implementation of GST & I stand vindicated for my earlier comments. But overall this is a regressive step & such to & fro on rate changes shows the Govt in bad light.
Nobody has gone on & reduced rates of commodities whose prices have increased, so why the step-motherly treatment towards a particular product only
Plus to whosoever says that the 10% cess increase will not impact those who buy luxury vehicles/SUVs because they can afford them because it's not like their money grows on trees - when it's a percentage change its going to impact everybody the same - 10 will become 11 & 50 will become 55. And everybody, well almost, everybody pays income tax on what they already earn. In short, that argument holds no water.

PS- Personally pissed off (pardon the language mods) since I was looking at the Hexa post the recent price cut.
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Old 7th August 2017, 19:11   #630
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Default Re: GST effect on car prices?

This requires an act of parliament - so you have about a month. Watch discounts disappear in this period as dealers and manufacturers make hay while customers rush to beat the tax increase
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