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Old 10th February 2006, 12:37   #1
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Default Budget 06-07 effect on Auto industry

Hi all,

As you know Indian Union Budget 2006-07 is around the corner. Finance Minister P. Chidambaram has promised incentives for small cars in order to make India a small car hub.

What could this mean for the Indian Auto industry and more importantly for consumers like you and me.

1. New companies/models coming to India. With companies setting up shops here... cars and spares would be cheap. Lot of competition may do good to ASS.
2. Effect on prices of existing cars and companies like Marutis and Tatas... Not sure.
3. Any other trends that you foresee?
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Old 10th February 2006, 13:42   #2
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The recommendation has been given to FM for reducing Excise from 24% to 16%.
This will be definately applicable to small cars, may also be extended to all cars.
In anticipation of this price reduction many small car prices have been hiked now so that post budget the prices will come down to normal levels and car makers will make merry.
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Old 10th February 2006, 15:26   #3
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as far as the pricing is concerned, it is going to be worse, as it appears from the ultra-ambitious schemes of the government. the car firms have anyways already absorbed the duty cuts ( if any are given). and the government will compensate the duty cut on small cars by introducing something or the other on higher-end cars.

our finance ministers are pretty smart at their numbers.

so, IMO no effect on small-car segement and loss for higher segment.
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Old 10th February 2006, 15:36   #4
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Any idea how a 'small car' is defined ? I mean whether it is by engine capacity (CC/ BHP) or by length/weight?
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Old 10th February 2006, 15:44   #5
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Quote:
Originally Posted by k36
Any idea how a 'small car' is defined ? I mean whether it is by engine capacity (CC/ BHP) or by length/weight?
that is also not sure as yet. i would love if they include all cars upto the size of city zx in small segment ...or maybe 1500 kg weight

Last edited by BuRnT RuBbEr : 10th February 2006 at 15:46.
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Old 10th February 2006, 16:08   #6
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The industry goes by SIAM classification. I guess the segments A1 (upto 3400mm) and A2 (3401 - 4000 mm) would come under small cars.

1. Various suggestions have been put forward to the governement including reducing the import duties on various component and raw materials from the current 10/15 percent to 5 percent.

2. Most of the other suggestions revolve around reducing taxes like surcharge and distribution tax. A good thing if it happens. CBUs most likely to not see any import duty cuts.

3. Retirement period for old vehicles also suggestred, but i really dont think this will be implemented as this would have a huge political impact.

4. Proposal to ratinalise depreciation rates (from the current 15 % to 30 %).

5. Apart from these, i am hoping serious measures would be taken to make india a manufacturing hub for both automobles and auto components.

These are based on what the industry has suggested and a few other readings.

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Old 11th February 2006, 17:47   #7
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i heard that the import duty is gonna be down to 80%,
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Old 11th February 2006, 19:05   #8
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Default Food for thought

Maruti sales affected on tax talks...
An 8% cut in duties, it could shave around Rs 10,000 from the price of a car.
....

Source: http://news.moneycontrol.com/backend...?autono=201884
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Old 11th February 2006, 21:18   #9
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Quote:
Originally Posted by Kinetik
i heard that the import duty is gonna be down to 80%,
rare case....left plays an important role in policy matters, and the fiscal deficit this coming year is bound to shoot up when more and more rural and sub-urban schemes are implemented.

guess it' time for the government to end the tax holiday for export houses, atleast the established ones.
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Old 15th February 2006, 17:55   #10
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Default Budget 2006-2007: Outcome and Comments

Not only for the automotive sector, but everything else as well. As per news reports, it points to another budget for the "common man". However the FM is keen not to get too regressive and stall the economic boom going on.

In laymens terms, what does this translate for you & me?

1. Price of cars & bikes (new & used imports as well)?
2. Price of PC's/laptops?
3. Price of consumer electronics?

Basically, if we're thinking of picking up one of the above items, should we wait or go ahead...
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Old 15th February 2006, 18:02   #11
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BUDGET 2006-2007 hmm thats an interesting topic Rtech. it seems the interest rates on all the loans are going to be higher. so this would mean all housing or car loans will be higher. and if the taxes also increase then it will surely lead to increased prie of all commodities. this will include OUR LOVE (CARS & BIKES) too!! anyways due to increased interest on loans guys who buy cars and bikes on loan wil lhave to shell out more.

so if we are planning to buy one i think we should go for it now!!
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Old 15th February 2006, 18:59   #12
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Rtech, Wait !! Most of these items will see a fall in prices according to the hints that have been emerging from the FM and the concerned parties .

Cheers
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Old 15th February 2006, 19:19   #13
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LOL! Two responses to the post and both diametrically opposite. I am loving it
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Old 16th February 2006, 10:02   #14
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lol RX!

I read somewhere that duties on cars are to be slashed, atleast for small cars. However, whether the industry passes on this benefit to the consumer is a different question, as they may cite increase in steel/fuel costs to offset that reduction in duty.
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Old 16th February 2006, 10:06   #15
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Quote:
Originally Posted by Rtech
, as they may cite increase in steel/fuel costs to offset that reduction in duty.
Fuel cost going up for sure. Today's paper says that clearly..
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