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Old 8th June 2011, 18:45   #196
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Default Insane duties on cars

The Suzuki Kizashi Manual transmission costs 20000 dollars in the USA which is equivalent to 9 lakhs. Here in India we have to buy the same car for 17 lakhs just because it is a fully imported car!

The 8 lakhs extra which we shell out is pocketed by the govt as we have 100% duty on imported cars. The maruti CEO says they want to test the sales of a low volume car by importing it and if they get a positive response, then they would start assembling or manufacturing it. The CEO must be a 60year old retard who doesn't have the vision to understand how they are going to get a positive response if Indians have to buy it at double its original price. Then those sales rep are going to say that the sales are dismal and it would not be wise to start production of Kizashi in India. If they had manufactured it and priced at around 9 lakhs, this car would have blown the socks off other manufacturers and they would have followed suit by starting their production plants here and we would have got performance cars priced reasonably below 10 lakhs. As long as the attitude of these Indian CEOs or the govt towards taxation changes, we Indians have to put up with crap cars optimised for mileage with a budget of 10 lakhs. The same goes for all companies, if they start local manufacturing, all the civics, crvs, accords and fortuners will be within reach of most indians at around 10-12 lakhs. But alas, these performance cars are only in the reach of rich people only because of the ridiculous pricing.

Following are the pricing comparisions of cars in USA and India and the difference is only due to 100% import duty imposed on these cars

USA INDIA
CIVIC 7 lakhs 14 lakhs
CRV 12 lakhs 24 lakhs
ACCORD 10 lakhs 20 lakhs
Fortuner 12 lakhs 24 lakhs
BMW 320D 19 lakhs 38 lakhs

This shows how Indians are being ripped off as they have to pay so much tax to Indian govt not only for the exotic cars like porsche, ferrari etc but even for normal vehicles owned by foreign companies. They are just killing the performance enthusiasm in India which is in the inception stage. I wish there's an Anna Hazare like movement to force the govt to reduce the import duties!!
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Old 8th June 2011, 19:02   #197
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Default Re: Insane duties on cars

Quote:
Originally Posted by dharmana View Post
Following are the pricing comparisions of cars in USA and India and the difference is only due to 100% import duty imposed on these cars

USA INDIA
CIVIC 7 lakhs 14 lakhs
CRV 12 lakhs 24 lakhs
ACCORD 10 lakhs 20 lakhs
Fortuner 12 lakhs 24 lakhs
BMW 320D 19 lakhs 38 lakhs
To start with, in all of the above listed cars, except for CRV, I dont think any of the cars are CBUs [completely imported]. Most of them are CKD which attracts lesser duties compared to CBUs, but still high.

Isn't Civic manufactured in India? And frankly even if the cars are manufactured in India even after 100% localization, those will not be priced exactly at the same price point as another market - say US. I think the closest we found was the pricing in Russia, and that for Hyundai alone.

And c'mon, lets not talk about starting a campaign like Anna Hazare, that's for a cause. The duties that we are talking here is about "super luxury" items which cater to the needs of rich people and not common man - so why would the government waiver that.

Edit:: And we are overlooking the cost thats involved for the manufacture to get these cars into production locally - am sure they would have done their part of R&D well before choosing to bring some of these items via the CBU / CKD route. And yes, the govt has these duties in place to force the manufactures to produce cars in India [where the taxes are waived off] which will create some jobs too.

Last edited by swiftnfurious : 8th June 2011 at 19:06.
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Old 8th June 2011, 19:04   #198
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Default Re: Insane duties on cars

We cant to much than. One more thing we auto enthusiasts can do is do a la Anna Hazare kind of strike to make the stupid govt to reduce the import duty on cars drastically but there are remote chances that the govt will respond.
So lets wait till an auto enthusiast becomes the finance minister or a prime minister. I am being very optimistic but lets hope for the best.
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Old 8th June 2011, 19:25   #199
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Default Re: Insane duties on cars

Quote:
Originally Posted by dharmana View Post
USA INDIA
CIVIC 7 lakhs 14 lakhs
CRV 12 lakhs 24 lakhs
ACCORD 10 lakhs 20 lakhs
Fortuner 12 lakhs 24 lakhs
BMW 320D 19 lakhs 38 lakhs
Even if all these cars were 100% localized, it will still be way higher than the equivalent price in US. The US manufactured cars, even with their high cost of labor and other factors, are cheaper than cars in India simply because of the tax structure in our country. In the US, cars are not taxed at a very high rate. Read somewhere that in India, almost 30-40% of the final price of the car is contributed by taxes and levies. Prices will never be the same or even close, even after all the shoddy cost cutting and "indianizing" the cars, it is more than evened out by our high tax rates.

This will only change if the govt of India considers cars as a necessity and not as a luxury and reduce tax accordingly - that is not likely to happen in the foreseeable future.
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Old 8th June 2011, 19:28   #200
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Default Re: Insane duties on cars

Ok. Lets talk about small cars then shall we.

In the UK:

Fiat Punto 1.3 Diesel Dynamic (75 horsepower) 13,000 = 9.5 lakh (approx)
Honda Jazz 1.2 iVTEC 12000 = 8.7 lakh (approx)
Honda Jazz 1.4 iVTEC 15000 = 10.95 lakh (approx)
Hyundai i10 1.2 Active 9500 = 6.94 lakh (approx)
Hyundai i20 1.4 CRDi 13,700 = 9.86 lakh (approx)
Nissan Micra 1.2 11,000 = 8.03 lakh (approx)
Skoda Fabia 1.6 D 14,700 = 10.73 lakh (approx)
Suzuki Alto (A-Star) 1.0 9200 = 6.72 lakh (approx)
Suzuki Splash (Ritz) 1.2 10,600 = 7.75 lakh (approx)
Suzuki Swift 1.2 12,000 = 8.75 lakh (approx)
Volkswagen Polo 1.2 13,000 = 9.50 lakh (approx)
Volkswagen Polo 1.2 TDi 15,500 = 11.31 lakh (approx)


Moral of the story: This has been discussed a million times so people should STOP bickering. Do you really want international prices?? Really??

All prices are from TopGear Magazine UK and are for either top end or mid range models. Conversion rate is 73 and results are rounded off in some cases.





Quote:
Originally Posted by patil View Post
We cant to much than. One more thing we auto enthusiasts can do is do a la Anna Hazare kind of strike to make the stupid govt to reduce the import duty on cars drastically but there are remote chances that the govt will respond.
So lets wait till an auto enthusiast becomes the finance minister or a prime minister. I am being very optimistic but lets hope for the best.
Striking is NOT the answer to everything man!! The government gives too much freedom to its people so that they can go on strikes. Strikes of any kind should be dealt with in force.

Last edited by benbsb29 : 8th June 2011 at 22:03. Reason: Corrected typo for Ritz.
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Old 8th June 2011, 19:42   #201
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Default Re: Insane duties on cars

I'm all for the current duty structure on CKDs and CBUs.

- It encourages foreign manufacturers to build cars ground up in India rather than just importing components or complete units.

- Building cars completely (including engine & transmission) in India helps hundreds of small, medium & large auto component companies. These companies will invest further in their business and start exporting to other countries

- When that happens, employment generation in auto manufacturer and auto component sectors go up.

- We Indians notoriously evade taxes. The best way to tax the Indian rich is to tax their consumption (till the country figures out a way to increase tax compliance).

The auto industry employs (directly & indirectly) 1.3 crore people. India has become the fourth largest Asian exporter of automobiles/ components largely because of the current duty structure. If the duties are tweaked, it should be tweaked to increase employment opportunities & also increase our exports in the long term.
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Old 8th June 2011, 19:47   #202
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Red face Re: Insane duties on cars

@Cyrus

What the OP referred to was the cars which are imported as CBU. The ones you have referred are already localized hence the Indian prices would seem much lesser than their UK counterparts.
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Old 8th June 2011, 19:53   #203
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Default Re: Insane duties on cars

Quote:
Originally Posted by Cyrus43 View Post

Moral of the story: This has been discussed a million times so people should STOP bickering. Do you really want international prices?? Really??
Are you aware that there are other countries in the world where cars are sold apart from UK. Also remember, in spite of higher prices, when you do PPP adjustment, cars are cheaper than in India.
Everything is more expensive then India in many western countries. What matters is not the direct conversion but PPP adjusted conversion.
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Old 8th June 2011, 20:02   #204
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Cyrus, i was not talking about small fuel efficient cars with crap performance. Obviously there are very few takers for them in UK so they must cost high. I was talking about decent performance good looking cars which motivate people to drive and have fun. And I am not talking about porsches and ferraris here. Why should a decent bhp mid-segment car or SUV in India cost the double of what it costs in the USA or UK? Except for the small cars you mentioned, virtually all other cars in mid-segment, large, sports and SUV category are way costlier in India. And I was referring to Anna Hazare style strike as a joke. Honestly i would not expect people to come out on the streets to protest against car prices!! where's ur sense of humour?

Swiftnfurious, I am sure that Honda imports all their cars as CBU and do not assemble any of their cars in India. That's why their cost is so high and not because of the quality as many seem to believe. I think the real quality stuff of Honda comes from their Acura category(not even available in India) which are truly high performance and not the civics and Accords. And I don't think these cars like Accord are superluxury. I am sure that Americans would differ with that opinion. Its just that we pay a premium for these cars so they appear as super luxury to us. If we are really about super luxury then I think we should be talking about Mercs, Bentleys, Honda Acura, Cayennes and stuff of those sort.

Even the CKD route doesn't bring the taxes down much and what is bothering me is that the govt has hiked the taxes on CKD cars also by 30%. This is a regressive attitude that is killing the sports segment just because our Indian companies like Tatas, Mahindras and Ambassadors are not upto it and they are lobbying big time with the govt to keep the taxes high on imported cars so that they can sell more of their crap cars. This lack of competition is in turn making them complacent and the result is no innovation from their end and we have to make do with Ambassadors and Safaris for decades.

The only expensive cars in Maruti's stable now are Grand Vitara and Kizashi now and that's not because they are high-end or superluxury. Its just because they are 100% imported. Grand Vitara costs 10 lakhs in Japan. This is what i want to underline. I am sure our counterparts in Japan, UK and USA will agree with me that Accords, Kizashis and Fortuners are just average cars there and not the real stuff which they are being made out to be here. Why Indians always have to settle for less though they pay premium prices?

The only solution to this is for foreign companies is to invest and start production of their cars including the engine in India itself so that the govt is happy, Indian customer is happy due to affordable pricing and also the companies themselves as India is an emerging economy and more people are buying. I know all this is gonna happen, but when? After we become old?

Godlur, you are right. the reason most of the small cars are cheap in india is because of the labour costs as they are locally manufactured here for example swift, i10 etc. But that is my point. We only have the infrastructure, plants or capacity/technology to manufacturer low end fuel efficient small cars and not the performance oriented luxury cars

Last edited by .anshuman : 8th June 2011 at 21:44. Reason: Back to back posts merged. Please use edit option if posting again within 30 mins. Thanks
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Old 8th June 2011, 20:17   #205
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Default Re: Insane duties on cars

Quote:
Originally Posted by smartcat View Post
I'm all for the current duty structure on CKDs and CBUs.

+1 to that

Quote:
Originally Posted by dharmana View Post
Cyrus, i was not talking about small fuel efficient cars with crap performance. Obviously there are very few takers for them in UK so they must cost high.
I don't believe so - AFAIK UK has a lot of takers for small cars.

Quote:
Originally Posted by dharmana View Post
Swiftnfurious, I am sure that Honda imports all their cars as CBU and do not assemble any of their cars in India.
Nope - Honda has a plant in Noida - and manufactures the all of their cars except CRV there.

Excerpt from Honda website - 'The company’s product range includes Honda Jazz, Honda City, Honda Civic and Honda Accord which are produced at the Greater Noida facility with an indigenization level of 77%, 76%, 74% and 28% respectively. The CR-V is imported from Japan as Completely Built Units. '

Quote:
Originally Posted by dharmana View Post
And I don't think these cars like Accord are superluxury. I am sure that Americans would differ with that opinion. Its just that we pay a premium for these cars so they appear as super luxury to us.
Absolutely true

Last edited by blackasta : 8th June 2011 at 20:19.
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Old 8th June 2011, 20:17   #206
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Default Re: Insane duties on cars

>>>

With approximately 70% of India's population earning at or lower than $ 1.25 per day, I do not think that the government, any government will simply reduce duties to low levels, in order that maybe 5% of the population buy and enjoy an imported 320/Camry/Passat and so on.

How many 320s will India be able to absorb at present economic levels, at say INR 19 l to justify setting up a full scale assembly line with engine and gearbox assembly? When will BMW break even?
100,000 units? 50,000 units? 10,000 units? 5,000 units?


Let us also find out the duty levels in EU and in the US of A that farm production imports face from poor countries ( something as low tech as bananas) before launching broadsides at our government.

Moral of the story : each country looks at its larger interests, and not at narrow niches which do not advance its broad economic agenda, unless there are strong political lobbies.

Regards, drive safe
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Old 8th June 2011, 20:21   #207
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Originally Posted by smartcat View Post
- When that happens, employment generation in auto manufacturer and auto component sectors go up.
When that happens, we all will grow old by then. Our sons might be able to afford them if the local production starts by the time they grow up. The taxes have been high for decades. Has any decent manufacturer like Honda, Mitsubishi, BMW etc started their production in India of their performance cars except for small fuel efficient cars? I am worried about the fate of performance cars and their affordability. They might go extinct. The small fuel efficent cars will never have a problem selling with their lost costs and what with the fuel prices going up and up

Last edited by Technocrat : 8th June 2011 at 23:04. Reason: fixed quotes
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Old 8th June 2011, 20:33   #208
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Quote:
Originally Posted by dharmana View Post
We only have the infrastructure, plants or capacity/technology to manufacturer low end fuel efficient small cars and not the performance oriented luxury cars
The main reason for this is the low returns on investment due to low volumes being sold. India as you know is cost conscious country with the volumes mainly coming from the new buyers. How many takes would you find for performance cars, there is no market as such for these cars. Hence no infrastructure.

Quote:
Originally Posted by dharmana View Post
Has any decent manufacturer like Honda, Mitsubishi, BMW etc started their production in India of their performance cars except for small fuel efficient cars? I am worried about the fate of performance cars and their affordability. They might go extinct. The small fuel efficent cars will never have a problem selling with their lost costs and what with the fuel prices going up and up
Thats what sells in India. If BMW comes up with an offer in sub 5L or 10L category they would sell in great nos because it all boils down to the affordablility of the Indian consumer.
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Old 8th June 2011, 21:12   #209
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Originally Posted by ghodlur View Post
The main reason for this is the low returns on investment due to low volumes being sold. India as you know is cost conscious country with the volumes mainly coming from the new buyers. How many takes would you find for performance cars, there is no market as such for these cars. Hence no infrastructure.


Thats what sells in India. If BMW comes up with an offer in sub 5L or 10L category they would sell in great nos because it all boils down to the affordablility of the Indian consumer.
Above and in bold.
I believe India is currently the 2nd largest growing car market in the world right now, Once demand creeps up which it will. I reckon in the coming few years(mid-term) I do see luxury manufacturers localizing 100% or near it to fully capitalize on this, they would be fools not to. India rising, It isn't an opportunity they will miss and expect to see large long term investments being made by these companies and hence the cost go down.
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Old 8th June 2011, 21:30   #210
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Default Re: Insane duties on cars

There are places where you can go to get luxury or sporty cars at low prices by avoiding paying duties. And it is completely legal too.

That is, you can get a Civic for 8 lacs, BMW 3 series for 15 lacs, CRV for 12 lacs and Accord for 10 lacs. So basically, you don't need to be 50 years old to enjoy these cars now.









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