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Old 7th August 2017, 16:34   #1
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Default Hyundai might cancel hybrid plans for India

Hyundai might postpone or cancel its plans to introduce hybrid vehicles in India, sighting an unfavourable tax structure.

The government recently introduced tax reforms, under which, hybrid vehicles attract 28 percent GST and an additional 15 percent cess. This puts hybrid cars in the same tax slab as petrol and diesel-powered luxury cars. Pre-GST, the effective tax on hybrid vehicles was 30.3 percent. After the reforms were introduced, this rate has gone up to 43 percent.

Hyundai might cancel hybrid plans for India-hyundai-ioniq.jpg

Hyundai had earlier announced plans to showcase its Ioniq hybrid model at the 2018 Auto Expo. According to media reports, these plans have been shelved and the company will now look at introducing electric vehicles instead. Hyundai was also planning to introduce mild-hybrid versions of existing models like the Creta and the new Verna. This plan has been adversely affected by the new tax structure as well.

Source: ET Auto

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Last edited by TusharK : 7th August 2017 at 16:35.
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Old 7th August 2017, 17:08   #2
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Default Re: Hyundai might cancel hybrid plans for India

Taxing hybrid vehicles at 43% GST is one of the best decisions by govt. Before this all the companies were trying to bring in these mild hybrids to cash in on the loophole. Maruti even reaped the subsidies under FAME scheme for some time.

Hyundai should release the full electric ioniq instead of Hybrid ioniq. Out of all the volume makers in India, Hyundai is the only company to have full electric EV already in the market (Europe and US).
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Old 7th August 2017, 18:10   #3
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Default Re: Hyundai might cancel hybrid plans for India

'Mild Hybrid' is still better for the environment than 'no Hybrid'. The SHVS was a mild hybrid that was better to the environment in the form of higher mileage and less fuel.

Mild Hybrids are going to be back. This just needs a policy review by the government and can happen anytime like we saw the hike on SUV & Luxury cars recently
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Old 7th August 2017, 23:02   #4
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Default Re: Hyundai might cancel hybrid plans for India

Quote:
Originally Posted by sri_tesla View Post
Taxing hybrid vehicles at 43% GST is one of the best decisions by govt. Before this all the companies were trying to bring in these mild hybrids to cash in on the loophole. Maruti even reaped the subsidies under FAME scheme for some time.

Hyundai should release the full electric ioniq instead of Hybrid ioniq. Out of all the volume makers in India, Hyundai is the only company to have full electric EV already in the market (Europe and US).
I believe this is shortsightedness and a low trust in policy. It is IMO one of the biggest mistake that the government has made. You don't go from mostly Diesel engines to electric in one day. Its a process. Humans didn't suddenly start going around in Bentley's in the olden days. We had horse carriages first, and then cycles, then cars and then planes.

Similarly, India as a market needs to slowly move to hybrids. Yes, I agree mild hybrids are the biggest scam, but who is stopping the government from having a proper scheme that can prevent companies from exploiting such loopholes? But, directly to move to electric in a country where electricity shortage is such a big problem, charging infrastructure nil and people's mindsets still set on cheap and efficient diesels, moving to electric direct would require massive changes. Instead, if we allow hybrids which slowly make people understand the benefits of electric, and plug in hybrids that slowly warrant a need for infrastructure upgrade, the transition to electric would be smooth and successful.

Look up Norway as an example, they have one of the largest per capita electric cars, despite being a huge exporter of fossil fuels. This is because they give electric cars and hybrids so many preferential treatments such as free parking, no tax or toll, free charging that it makes sense to not buy a more expensive fossil fuel car.
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Old 8th August 2017, 09:24   #5
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Default Re: Hyundai might cancel hybrid plans for India

Quote:
Originally Posted by prakhar1998 View Post
Look up Norway as an example, they have one of the largest per capita electric cars, despite being a huge exporter of fossil fuels. This is because they give electric cars and hybrids so many preferential treatments such as free parking, no tax or toll, free charging that it makes sense to not buy a more expensive fossil fuel car.
Norway's push towards electrification isn't a replicable model for any other country in the world for several reasons, getting into which, would mean severe digression from the discussion.

But yes, I agree that the government should plug the loopholes and prioritize Hybrids and Plug in Hybrids. For example, A BMW 3 Series Plus in Hybrid, with around 30 miles of pure electric range along with a petrol engine is a MUCH better car for our crowded cities than the 320D. It's surprising (or maybe not) that the government doesn't see that. By taxing hybrids at the current rate, we're only adding to the problem.
One step at a time. That's the key. Plug in Hybrids first, with ~25-50km of pure electric range will help people slowly get used to charging their cars. Offices, homes will slowly start adapting to them, which in turn will pave the way for pure electric vehicles.
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Old 8th August 2017, 13:12   #6
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Default Re: Hyundai might cancel hybrid plans for India

Well, you can't really blame Hyundai. How does a CEO take a call on investing thousands of crores in a country, when the policy-making is so inconsistent. 2.0+ L diesel engines are banned overnight (even those that meet Euro-6 norms), lame hybrids get away with full hybrid benefits, GST might be increased on luxury cars again...while I have faith in the current government, they must definitely show more consistency & logic in policy making.

Quote:
Originally Posted by sri_tesla View Post
Taxing hybrid vehicles at 43% GST is one of the best decisions by govt.
Agreed if you are talking about the so-called mild hybrids. The government should go ahead & tax them at 100% .

However, proper hybrids (like in the Prius & Camry) need to come down to mainstream cars. And for that to happen, GST rates on them need to be heavily discounted. Full hybrids are built just for our kind of driving conditions and will lead to massive fuel / eco benefits. In an FE-obsessed country like ours, people will go crazy about hybrids as long as they are priced well.

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Originally Posted by bhpfaninblr View Post
'Mild Hybrid' is still better for the environment than 'no Hybrid'. The SHVS was a mild hybrid that was better to the environment in the form of higher mileage and less fuel.
Based on what owners have reported, there is hardly a difference in the real world. In fact, most of the difference comes from the auto start / stop functionality anyway (which is a cheap add-on or can be manually replicated).

Last edited by GTO : 8th August 2017 at 13:14.
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Old 8th August 2017, 14:59   #7
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Default Re: Hyundai might cancel hybrid plans for India

Quote:
Originally Posted by GTO View Post
However, proper hybrids (like in the Prius & Camry) need to come down to mainstream cars. And for that to happen, GST rates on them need to be heavily discounted. Full hybrids are built just for our kind of driving conditions and will lead to massive fuel / eco benefits. In an FE-obsessed country like ours, people will go crazy about hybrids as long as they are priced well.
Are companies really passing the tax benefits on these Hybrid vehicles to consumers before GST?

Lets take the Camry for example. Tax on normal Camry was around ~51% while Hybrid Camry was ~30%. So in this case, both should have been priced similar at worst case, including Hybrid drive train costs. But Toyota priced Hybrid model Rs 5 lakhs more than the regular one. Its even worse in case of Honda Accord.

Again, these so called hybrids provide better mileage than their regular counterparts, but not much more than small hatchbacks. In my opinion, govt should categorize cars as Hybrids which can travel at least 50 KM or more entirely only on battery and electric motors.

None of these companies (especially likes of Toyota, Honda, Mercedes,...) are really interested in bringing true Hybrids to India. They just want to sell more and more of their combustion engine vehicles. If its Hybrid then at much higher price than the regular ones.
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Old 8th August 2017, 15:12   #8
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Default Re: Hyundai might cancel hybrid plans for India

I feel that soft taxation for Hybrids is highly desirable. However, the regulations must be suitably tightened and manufacturers fined heavily for mislabelling.
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Old 8th August 2017, 15:15   #9
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Default Re: Hyundai might cancel hybrid plans for India

Quote:
Originally Posted by sri_tesla View Post
Are companies really passing the tax benefits on these Hybrid vehicles to consumers before GST?

Lets take the Camry for example. Tax on normal Camry was around ~51% while Hybrid Camry was ~30%. So in this case, both should have been priced similar at worst case, including Hybrid drive train costs. But Toyota priced Hybrid model Rs 5 lakhs more than the regular one. Its even worse in case of Honda Accord.
Absolutely! Let's not even start about Lexus. The pricing was at another level even before GST, even though they had all the capabilities to assemble the cars using Toyota facilities in India.

But I agree with GTO. Proper hybrids should be given tax benefits so they become mainstream. This certainly is the future. However, your concern is most valid as well to prevent manufacturers simply pocketing all the benefits.

Hence I would say - proper hybrids that are made in India should be given the benefits, CKD and CBU should be exempted. The investments made into local production will ensure they will price it competitively (utilizing the govt benefits) to ensure sales and thus returns.

What we need are hybrid versions of more affordable models like the upcoming Civic, Corolla etc rather than these brand showcase launches that happened till date, which were all impractical for the market, except those who really wanted the eco-friendly tag.

Last edited by CrAzY dRiVeR : 8th August 2017 at 15:19.
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Old 10th August 2017, 02:48   #10
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Default Re: Hyundai might cancel hybrid plans for India

Quote:
Originally Posted by sri_tesla View Post
Are companies really passing the tax benefits on these Hybrid vehicles to consumers before GST?

Lets take the Camry for example. Tax on normal Camry was around ~51% while Hybrid Camry was ~30%. So in this case, both should have been priced similar at worst case, including Hybrid drive train costs. But Toyota priced Hybrid model Rs 5 lakhs more than the regular one. Its even worse in case of Honda Accord.

Again, these so called hybrids provide better mileage than their regular counterparts, but not much more than small hatchbacks. In my opinion, govt should categorize cars as Hybrids which can travel at least 50 KM or more entirely only on battery and electric motors.

None of these companies (especially likes of Toyota, Honda, Mercedes,...) are really interested in bringing true Hybrids to India. They just want to sell more and more of their combustion engine vehicles. If its Hybrid then at much higher price than the regular ones.
The Camry Hybrid was really competitively priced, especially in Delhi and it sold rather well. IIRC, it became the highest selling Hybrid vehicle in India, ever. The Accord was so expensive because it was a CBU and didn't reap benefits of lower taxation. As for benefits of Hybrid relating to mileage, Hybrids aren't just better at saving fuel, they also have significantly lower emissions, especially at city speeds. This means, crowded cities like Delhi and Mumbai can significantly lower their pollution by incentivising Hybrids that will mostly run on battery in the bumper to bumper traffic. I agree with the minimum KM sort of rule, but maybe a more viable rule would be progressive taxation based on the type of hybrid, and their capabilities. So, small Hybrids would be incentivised, but better hybrid systems would be incentivised even more.




Quote:
Originally Posted by CrAzY dRiVeR View Post
Absolutely! Let's not even start about Lexus. The pricing was at another level even before GST, even though they had all the capabilities to assemble the cars using Toyota facilities in India.

But I agree with GTO. Proper hybrids should be given tax benefits so they become mainstream. This certainly is the future. However, your concern is most valid as well to prevent manufacturers simply pocketing all the benefits.

Hence I would say - proper hybrids that are made in India should be given the benefits, CKD and CBU should be exempted. The investments made into local production will ensure they will price it competitively (utilizing the govt benefits) to ensure sales and thus returns.

What we need are hybrid versions of more affordable models like the upcoming Civic, Corolla etc rather than these brand showcase launches that happened till date, which were all impractical for the market, except those who really wanted the eco-friendly tag.
Completely agree, however CKD hybrids should also be taxed lower. Hybrid is a complex technology and going the CKD route would ensure faster integration. It isn't solely about the government or companies making money, it is more about changing the trends of a market, especially one that is struggling with pollution.
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Old 11th August 2017, 12:23   #11
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Default Re: Hyundai might cancel hybrid plans for India

Looks like Govt. has too much futuristic visions by imposing 7.5 percent lesser taxes on electric cars and making it very clear that the it is promoting electric cars and skipping Hybrid step.

However I strongly agree with finance Minister Jaitley on the point that despite giving a tax relief for smaller hybrid cars, the automobile companies instead of passing on the relief to the customer went on to increase the prices of Hybrid cars.
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