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Old 4th March 2011, 15:56   #31
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Default Re: Entry-level luxury cars may cost more : Budget 2011

I think that even the Z4 assembled in USA gets its engine and gearbox built in German Plant and then bolted on in USA. Same is the case with Mercedes assembled in SA.
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Old 4th March 2011, 16:18   #32
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Default Re: Entry-level luxury cars may cost more : Budget 2011

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Originally Posted by Yeldo View Post
Income and Corporation taxes account for 35% of the government's revenue, and taxing a luxury car that is bought by those who pay these any more than the present level is what you may define as oppressive taxation.

There is no genuine eco- friendly vehicle in the truest sense of the phrase, my dear sir. Almost all such vehicles are made for the benefit for emission targets, credits and R&D grants and write- offs that a regulate- all EU bureaucracy and a chocked- with- smog California politicians dream up to satisfy the outcries made at fund-raising events of activist groups.



Your point taken and is well- intended, but it is not economically feasible to insist that every car should have such levels of localization, especially comparatively low volume ones. And remember this proposal also hits manufacturers like Toyota who are not exactly luxury manufacturers.

What about products and services other than cars- are they also localized to such extent? For example, a cut- off percentage for foreign components in telecommunication equipment or computers? Or may we demand a 50% localization in airline personnel on flights operating out of India? Worse, is the petrol we put in our cars 60% Indian? How many of these auto manufacturers are 60% Indian owned?

Further, if every country starts on setting such norms, were would our exports go? Or would we be able to export anything at all including human capital? An open economy, Sir, is what brings prosperity and opportunity. Not synthetic and artificial barriers.
I completely agree with yeldo and would like to take his point further. Suppose that the germans do decide to start up an engine manufacturing plant in India. Everyone here seems to believe that prices of these cars would come down further. But I beg to differ. Engine production plants require huge infrastruture. There will be huge fixed overheads [such as depreciation, land usage related expenses] which have to be recovered from the product they sell.

this is how it works. They first estimate how much they will have to spend on such fixed overheads, then estimate how many cars they are going to produce in the same period. Thus, they will have an estimate as to how much fixed overhead is to be charged on each product. Since the luxury cars still have volumes of barely 5000 a year, each car would have to bare a huge part of the overhead.

For someone like toyota who has fairly large volumes, fixed overhead per car would be far lesser [fixed overhead reamins constant, irrespective of the number of units produced].

Simply put, prices might still be as high, and in extreme circumstances, higher than current prices. Unless numbers in production increase, it is just not feasible.

If this bill is passed, IMO the manufacturers would probably cut a few features, increase the prices but 2-3L and continue. .

Losers in this case: US!
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Old 4th March 2011, 16:24   #33
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Default Re: Entry-level luxury cars may cost more : Budget 2011

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Originally Posted by issigonis View Post
>>>

Please note that most European auto majors have manufacturing plants only in Europe and in the US and the rest of their plants elsewhere are assembly ops only.
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Originally Posted by ajman28 View Post

This new policy has actually made the ckd manufacturers to think whether or not to put a manufacturing hub here. Most of them are anyway thinking of it. Even if one or two do make this a hub, its definitely good for the economy.

.
Looks like India is pulling the manufacturers in, rather than wait and let them decide. I would say, good move by the government.
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Old 4th March 2011, 16:42   #34
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Default Re: Entry-level luxury cars may cost more : Budget 2011

>>>

To re-iterate :

1. This is long term/strategic for the auto majors, heavy investments involved

2. Do the offtake over five years at most, as accurately as possible, not only for India, but also for other geographies that they may want to serve from out of India; this might well lead to India/emerging market spec cars, five years down the line

3. Initially the auto majors will want to do their best sellers in India only ( e.g., the 3, with smaller engines, less sophisticated gearboxes) and expand the portfolio later as the market grows and skills mature

4. Opportunity for all auto majors to transform their manufacturing capabilities/assets to the next level

The government has to make its policy transparent and non-discretionary. Or is that hoping for too much?

Regards, drive safe
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Old 4th March 2011, 16:43   #35
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Taxing imports does not automatically mean the domestic ancillary and component industry will thrive. If that were the case, the first 50 years of our independence would've seen us going places.

Import taxes only breed complacency in local manufacturers. They now know that they need not innovate, given that innovative imports are simply not affordable, leaving the public no choice. In other words, Premier Padmini and Hindustan Ambassador rinse and repeat.

I'm all for feeding more Indian families with my money and not seeing our money go abroad, but this is not the right way to do it. The right way to do it is to think holistically. Develop your strengths and export them. Forget about your weaknesses and import them. On the whole, try to achieve a current account surplus (net exporter) so that "Indian money stays in India".

Attacking selective industries, especially those where local expertise is pitiable and has historically shown no signs of willingness to improve when presented with the opportunity to do so, is totally counter-productive in the long run.

As others have pointed out, scale economies mean that most luxury marques will *not* set up shop in India because that'll make their cars even more expensive than simply upping the duties on imported components from 10% to 110% would.

Or India should enter into trade agreements with the rest of the world to ensure that other nations can take in the engines that are produced in India without taxing those imports. That'll impart the scale that the manufacturers would need while also providing them the supposedly cheap (untrue, in my opinion, if you want same/similar levels of quality) access to the Indian labour market.

Bad move by the government if you ask me.

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Old 4th March 2011, 23:30   #36
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Default Re: Entry-level luxury cars may cost more : Budget 2011

Is it a good idea to buy a 320d CE now ? Does anyone know when and if the price hike due to the change in duties will come into effect?. Mumbai dealers said ex stock vehicles will be available at the current prices . Quotes seem to be list prices.. (corp edition, 25.95) .
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Old 4th March 2011, 23:58   #37
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Default Re: Entry-level luxury cars may cost more : Budget 2011

I support this move. A very good one in the long run. Hats off to pranabda.

Quote:
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Taxing imports does not automatically mean the domestic ancillary and component industry will thrive. If that were the case, the first 50 years of our independence would've seen us going places.
In the first 50 years, even the indian companies were taxed/red taped to such an extent that they won't survive. Only the powerful and the well connected survived. That's not the case now.

Last edited by airbender : 5th March 2011 at 00:02.
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Old 5th March 2011, 11:28   #38
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Default Re: Entry-level luxury cars may cost more : Budget 2011

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Is it a good idea to buy a 320d CE now ? Does anyone know when and if the price hike due to the change in duties will come into effect?. Mumbai dealers said ex stock vehicles will be available at the current prices . Quotes seem to be list prices.. (corp edition, 25.95) .
>>>

Ravich,

It will be good if you have a word with someone who is reliable at the dealers'. Or at BMW headquarters in India. The point is nobody seems to know, now.
I got information that prices might rise by anywhere from 5l upwards, if the government decides to implement it. I don't see prices going southwards, in any case.

I foresee lobbying and counter lobbying : bad.

Please enquire and then decide.

Regards, drive safe
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Old 7th March 2011, 23:18   #39
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Default Re: Entry-level luxury cars may cost more : Budget 2011

Quote:
Originally Posted by issigonis View Post
>>>

Ravich,

...I foresee lobbying and counter lobbying : bad.

Please enquire and then decide.

Regards, drive safe
Thanks . Voice of sanity ! Will heed the advice. Dealers do seem anxious to make a sale. Will keep you posted.

On the bigger picture, an unpredictable duty and taxes regime is bad for for business in general. Thank heavens, North America , Europe don't return this in kind, on our exports.
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