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Old 13th April 2007, 11:27   #1
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Default The reason behind the 1.2 liter engine rule?

This baffled me at the time I first heard it, and it still does. Why does the Govt. give an 8% concession on taxes to cars that have an engine capacity of less than 1,200cc?

I can understand and support the tax cut for cars less than a certain length, as this makes complete sense on our small, congested roads. However, I fail to understand the reasoning behind the engine capacity rule. From my point of view, it has the following negatives:-

- Fuel consumption does not change much
As cars get heavier due to ever increasing safety laws, a 1.1 liter engine putting out a feable 55-60 hp will consume almost the same, or more fuel than a car with a capacity of 1,500cc. because...

- less power and torque
This means that a driver has to revv the engine and work the gearbox more to stay abreast with traffic. Also, the lack of power makes overtaking more dangerous.

- Costs the same to build

There really cannot be much of a difference in cost to manufacture a 1.5liter engine or a 1.1 liter one.

Maybe someone here can shed some light on the rational behind this decision.

Last edited by Rtech : 13th April 2007 at 11:29.
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Old 13th April 2007, 11:35   #2
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Well its not about what we think but what the government thinks. According to the government,

1. Smaller the engine, more the fuel efficiency.

2. Smaller engine would invariably go into a hatch. (this is actually true most of the times, except cars like Petra 1.2)

3. Because of point 2, production small cars will be encouraged. Smaller the car, lesser the road space.

Again, this is not I what think, but what the Government of India thinks.

Last edited by DCEite : 13th April 2007 at 11:37.
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Old 13th April 2007, 11:59   #3
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Rt,

The real benefit applies to the 800cc - 1000cc cars which are more fuel-efficient and smaller (Alto, 800, Santro etc.). Dont include the Palio Stile, Aveo UV-A as they are exploiting this rule. A good workaround to this exploitation would be to extend the tax discount based on engine size AND exterior dimensions.

The government has only done this to encourage the purchase of smaller cars which are more FE, less poluting, occupy lesser space on the road etc. They have also done this to make entry-level cars that much more affordable to first time car buyers.

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This means that a driver has to revv the engine and work the gearbox more to stay abreast with traffic. Also, the lack of power makes overtaking more dangerous.
Absolutely. Example is the recently launched Palio Stile where a user reported that the engine was too stressed to cope with the load of 4 - 5 adults. The Palio 1.2 was already lethargic, imagine what the 1.1 will be like.
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Old 13th April 2007, 12:09   #4
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Quote:
A good workaround to this exploitation would be to extend the tax discount based on engine size AND exterior dimensions.
I believe the rule is only applicable if the car meets BOTH these restrictions. However, this really only helps the older generation cars such as the Alto, Santro and Wagon R.

The cars made to meet the stricter norms are always going to be heavier. Case in point is the Swift, which is simply an evolution of the Alto, and weights a good 300 kg's more. Saddling it with a lower powered engine is not going to help it's cause in the fuel efficiency stakes.

Why not keep the rule based solely on the size of the car. I think Indian's anyways would always opt for a more fuel efficient car, so if a manufacturer can produce an engine which has both, adequate power and frugality, why not allow them to enjoy the same benefits even if that engine is 1.3 liters or 1.6 liters?

Quote:
The government has only done this to encourage the purchase of smaller cars which are more FE, less poluting, occupy lesser space on the road etc. They have also done this to make entry-level cars that much more affordable to first time car buyers.
If the Govt. were really serious about this, then they should have allowed the Reva to be sold tax free. Heck, this is what is done in other countries, but here in India, the one manufacturer brave enough to make an electric car for the city is not given any assistance whatsoever. Its sad that their cars sell more abroad than they do in India.

Last edited by Rtech : 13th April 2007 at 12:11.
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Old 13th April 2007, 12:37   #5
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The question is, how many people are actually present in the car at any instant of time. We always tend to say car is sluggish with 4-5 people. But when I look around, there are hardly 10% of vehicles (excluding cabs) which are occupied in that manner. I usually see 2 people in the car. Sometimes one. (like me ). Honestly how many times have we gotten stuck by sluggish cars? ..rarely.. Its usually bikes/autos...that are blocking us most of the time....

I think this would be one of the factors which could have led to govt deciding on this rule. They would have hoped that industry will reciprocate with more and more fuel efficient engines within this category itself. Whether the auto industry will do it, only time will tell.
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Old 13th April 2007, 14:32   #6
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Quote:
Originally Posted by Rtech View Post
Case in point is the Swift, which is simply an evolution of the Alto, and weights a good 300 kg's more.
How's Swift an evolution of Alto? There's nothing in common between the two of them.
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Old 13th April 2007, 14:50   #7
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Maruti is the biggest beneficiary of this peculiar rule which probably owes itself to Maruti's pull and lobbying skills in Govt. rather than to any logic or reason. The Maruti MD Mr Jagdish Khattar is a former IAS officer and GOI still held equity in Maruti when the rule was framed.
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Old 13th April 2007, 14:54   #8
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I'm surprised no one brought that up until now. It was fairly obvious when the rules were framed, and a lot of analysts pointed it out as well.
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Old 13th April 2007, 15:05   #9
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Quote:
Originally Posted by directinjection View Post
How's Swift an evolution of Alto? There's nothing in common between the two of them.
No, there is nothing in common between them, but the Swift is the evolution of the humbled M800.

The family tree is:
M800 > Zen > Alto > Swift.

Just so happens that we are the only country in the world where every generation is sold alongside! And the funniest bit was the Zen actually cost more than the Alto!

So, as you see, every successive model gets larger and heavier.
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Old 13th April 2007, 15:09   #10
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Quote:
Originally Posted by Rtech View Post
No, there is nothing in common between them, but the Swift is the evolution of the humbled M800.

The family tree is:
M800 > Zen > Alto > Swift.
Eh, you're getting it wrong. M800, Zen, and Alto are the same car, different generations, in that order. Internationally they were all known as the Alto. The Swift and the Esteem are the same car. Which is why the Esteem is called the Swift abroad. Or was, until it was discontinued.
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Old 13th April 2007, 15:13   #11
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Quote:
Originally Posted by Rtech View Post
No, there is nothing in common between them, but the Swift is the evolution of the humbled M800.

The family tree is:
M800 > Zen > Alto > Swift.

Just so happens that we are the only country in the world where every generation is sold alongside! And the funniest bit was the Zen actually cost more than the Alto!

So, as you see, every successive model gets larger and heavier.
I'm afraid you are mistaken.

It is common knowledge that Swift is an evolution of the Esteem whose hatchback version (made in Hungary) was sold in Europe as the Swift, just like the old Maruti 800 (pre-1986 model), new Maruti 800 (1986 and after), Zen and Alto were all sold in Europe as Alto (of course never at the same time).
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Old 13th April 2007, 15:13   #12
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Quote:
Originally Posted by directinjection View Post
Maruti is the biggest beneficiary of this peculiar rule which probably owes itself to Maruti's pull and lobbying skills in Govt. rather than to any logic or reason. The Maruti MD Mr Jagdish Khattar is a former IAS officer and GOI still held equity in Maruti when the rule was framed.

i dont think this is the reason bcos if its the case, maruti could have got the rule modified to 1.3 lits and got the benefit for swift also ( correct me if im wrong )

i think its more to do with fixing the capacity at a certain level and 1.2l is typically the threshold between B AND C SEGMENT

also with this benefit i think govt wants indirectly manufacturers to build engines out of india itself...( this is my logic only...) for e.g of cars <1.2 l engine capacity sell well here in india, cos might consider making the engines also based out of india itself
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Old 13th April 2007, 15:18   #13
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I know the Esteem was sold as the Swift abroad. But I thought the current Swift was a relacement for the Alto. Guess I was wrong. So what is the Alto's replacement? The Ignis? Either ways, the point I was making remains.
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Old 13th April 2007, 15:27   #14
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No, the Ignis is the car in between our Esteem and the new Swift. The Alto is replaced by the Lapin and the new MR Wagon. Ok now way OT, so I should stop.
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Old 13th April 2007, 15:37   #15
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The govt's intention is to make India a small car hub. Since the companies have started to put small engines in bigger cars now they want to change it to classification based on length.
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