[Turbokick]

So diesel cars can now be a kind of 'investment'
When the production of Qualis was stopped, few Qualis owners sold their car at price higher than the original price ! Such was its demand.
I won't be surprised if a 2-3 year old Swift goes for sale at a price equivalent to its original price if such govt plan is adopted.


Btw any alternative to this ?
Some people want diesel to be deregulated.
Any plans to counter the after effects?

[Chetan_Rao]

Originally Posted by Turbokick

So diesel cars can now be a kind of 'investment'
When the production of Qualis was stopped, few Qualis owners sold their car at price higher than the original price ! Such was its demand.
I won't be surprised if a 2-3 year old Swift goes for sale at a price equivalent to its original price if such govt plan is adopted.


Btw any alternative to this ?
Some people want diesel to be deregulated.
Any plans to counter the after effects?

Unfortunately, there's no ready fix available for the subsidy issue, but it will have to be done away with at some point. Some government will have to think beyond election compulsions and push through reforms, but I guess that would be expecting the impossible, eh?

Extra taxation on vehicle value might be a short-term fix, but it will create further complications down the line.

[drmohitg]

Originally Posted by Chetan_Rao

Unfortunately, there's no ready fix available for the subsidy issue, but it will have to be done away with at some point. Some government will have to think beyond election compulsions and push through reforms, but I guess that would be expecting the impossible, eh?

Extra taxation on vehicle value might be a short-term fix, but it will create further complications down the line.

But if you think from the Govt's point of view with the aim of trying to lessen the sales of Diesel Private cars on the road, then I feel taxation is the way to go. They cannot do away with the Subsidy on the diesel and at the same time cannot introduce dual pricing. This is the best and easiest way. Increase the OTR price so much that only a handful of people will buy the diesel car.

Ofcourse as a consumer I lose both ways, either by paying high petrol bills or taxes on the diesel car.

[samarjitdhar]

Originally Posted by Turbokick

So diesel cars can now be a kind of 'investment'

However funny it sounds now, I think you could be right. I should check how much my pre-refresh diesel Vento would sell for after this so called penalty imposed by the government for having a screwed up policy of taxing and subsiding in the first place.

So does it mean all passenger diesel cars? Even the ones purchased for commercial segment like the taxis and pool cars? Man, that is going to piss off M&M and Tata royally. If they are excluded how would they implement such a policy? Like imposing the tax on non-commercial purchases? How would they stop folks from faking papers then and getting out of paying this unfair penalty?

Every time I think that the government has taken the cake in formulating idiotic policy, it bakes a brand new one !!!!

Edit PS: Actually you are right CarValue | My Valuations | CarWale CarValue - CarWale. The Vento will fetch me a higher value now after around 6 months. A cool Rs 30K more at the higher end. Lets wait for this so called penalty to come in effect. Only in India can the government through its economic policies makes a car into an investment/asset. I cant stop smiling at this stupidity.

[Chetan_Rao]

Originally Posted by drmohitg

But if you think from the Govt's point of view with the aim of trying to lessen the sales of Diesel Private cars on the road, then I feel taxation is the way to go. They cannot do away with the Subsidy on the diesel and at the same time cannot introduce dual pricing. This is the best and easiest way. Increase the OTR price so much that only a handful of people will buy the diesel car.

Ofcourse as a consumer I lose both ways, either by paying high petrol bills or taxes on the diesel car.

But the proposed fixed price tax model (INR 80k/car) is ridiculous. It would effectively kill off the diesel car market below 10 lacs, not to mention it's unfair on everyone on the current waiting lists, as the manufacturers (esp. MUL that has the largest backlog) will ensure they delay deliveries till the levy comes into effect.

And I doubt SIAM will take this lying down. Expect a big furore and at least a negative correction, if not total rollback of the levy (if it ever sees the light of day in the first place).

[drmohitg]

Originally Posted by Chetan_Rao

But the proposed fixed price tax model (INR 80k/car) is ridiculous. It would effectively kill off the diesel car market below 10 lacs, not to mention it's unfair on everyone on the current waiting lists, as the manufacturers (esp. MUL that has the largest backlog) will ensure they delay deliveries till the levy comes into effect.

I was under the impression that we are just discussing this thing hypothetically. There is no way I believe that this is going to come. At the most they will increase the tax rates to ensure that cars costing below 10L will get pricier by 20-30k max. This is also on the higher side. The Auto industry is strong enough to ensure that nothing more then this is going to come.

[scopriobharath]

I feel that there will definetly be an increase in taxes for diesels but it would be by percentage. I am looking at 10% - 15% as the amount. Fixed amounts would not work IMHO. 80K on a small car is high but is peanuts for a BMW 7 series.

[Turbokick]

Originally Posted by samarjitdhar

Edit PS: Actually you are right CarValue | My Valuations | CarWale CarValue - CarWale. The Vento will fetch me a higher value now after around 6 months. A cool Rs 30K more at the higher end. Lets wait for this so called penalty to come in effect. Only in India can the government through its economic policies makes a car into an investment/asset. I cant stop smiling at this stupidity.

On the flip side, you now would have to pay the 'extra' money to upgrade or change your Vento with another diesel if you wish to do so

Suppose the govt adopts such policy, people will automatically shift back to Petrol cars for the simple reason that the price difference will be huge to be recovered in a good interval of time.
Price difference between Swift petrol and diesel is 1.2-1.3 lakhs now.
Add extra 50-60Ks and its 1.8 lakh rupees difference. The rate of interest will add another 20Ks leading to a 2 lakh rupees difference.

2 lakh rupees ?
It will easily take 4-5 years to recover and one will surely think of an upgrade by that time. Or who knows what kind of fuel policy would our govt be having at that point of time ?!

Interestingly this can be the best time to purchase petrol cars which are undergoing some good discount amount.
Eg :
- Honda City/Jazz
- Polo 1.6
- Fabia 1.6
- Fiat Linea/Punto Petrol
- Fiesta 1.6 petrol
- SX4 petrol

Who knows? Once diesel cars price go up, manufacturers/dealers might withdraw the discount schemes.

[Relativity]

I am about to buy a Diesel car in a month or two. I am confused now. I can buy a top end Fiat Punto Multijet Diesel 90 HP or a Honda City Corporate at the same price.

What are the chances of Diesel cars being levied this additional tax? How will it be paid, at the time of registration?

[Relativity]

Originally Posted by Relativity

I am about to buy a Diesel car in a month or two. I am confused now. I can buy a top end Fiat Punto Multijet Diesel 90 HP or a Honda City Corporate at the same price.

What are the chances of Diesel cars being levied this additional tax? How will it be paid, at the time of registration?

I am really beginning to lose sleep over this. Is it advisable to wait for the budget to see if they actually tax diesel cars and reduce subsidy on diesel? It would take me over 3 years to break even on the additional cost of a diesel engine and if it is brought at par with petrol, then I would be better off with a Petrol Sedan instead of a Diesel Hatch.

[drmohitg]

Originally Posted by Relativity

I am really beginning to lose sleep over this. Is it advisable to wait for the budget to see if they actually tax diesel cars and reduce subsidy on diesel? It would take me over 3 years to break even on the additional cost of a diesel engine and if it is brought at par with petrol, then I would be better off with a Petrol Sedan instead of a Diesel Hatch.

My take on this:

It is not advisable to wait for the budget if you are planning to buy a diesel car. NOW is the ideal time to go and get that oil burner ASAP. The losses ( presumed or actual) combined with a general dissent with the Govt's decision to not touch the diesel prices, environmental concerns and many more things will ensure that the taxes on the Diesel cars will be increased. By how much is something thats anybody's guess right now. I feel it will be substantial since the Govt is indeed losing a lot of money. Every car in Delhi is a diesel these days. I don't have any data but feel that 7-8 out of 10 cars sold these days are diesel. Infact the only petrol cars being sold manage that only because they don't have a diesel variant namely the Alto, WagonR, I10, Honda city.

Coming to the increase in diesel prices: Well this is next to impossible. Specially with the current mess the govt is in. They are trying to fight corruption charges at a mass level. I don't think they are going to touch the Diesel prices unless they plan to take Political Asylum. Increasing the taxes at the time of sale for the diesel cars is the only way I see them going.

So go ahead and get that diesel car now. For petrol cars you can wait as much as you want. Hope that helps.

[Turbokick]

I definitely agree to the fact that its the right time to buy an oil burner as there is no point in waiting till the govt declares the additional taxes if it is going to do so.

Still it will be advisable to compute the usage and see what exactly will be the break even point or time.

Its better to opt for diesel if the break even point comes as quick as 2-3 years time as the money will be recovered in quick time.

I am sure diesel policy will change with time and if the running is on the lower side then who knows by the time you cross the break even, the diesel might have been deregulated (say 4-5 years from now)!

If you buy a petrol and cut down your travelling via car , it can be a 'safe' alternate.

If the running is high and compulsory for the car, diesel is a no brainer.

[Chetan_Rao]

Originally Posted by drmohitg

I was under the impression that we are just discussing this thing hypothetically. There is no way I believe that this is going to come. At the most they will increase the tax rates to ensure that cars costing below 10L will get pricier by 20-30k max. This is also on the higher side. The Auto industry is strong enough to ensure that nothing more then this is going to come.

Of course we're discussing this hypothetically. My apologies for bringing in specifics, it just muddies the discussion.

Back to the original point, I still maintain diesel subsidies are unsustainable and it's a matter of when, not if the government will need to take a stand.

[basky]

Originally Posted by samarjitdhar

Every time I think that the government has taken the cake in formulating idiotic policy, it bakes a brand new one !!!!

Foot in mouth disease, actually.

Originally Posted by samarjitdhar

Actually you are right. The Vento will fetch me a higher value now after around 6 months. A cool Rs 30K more.

Only in India can the government through its economic policies makes a car into an investment/asset. I cant stop smiling at this stupidity.

In the sixties and seventies, one had to book an Amby or Fiat and wait for 3 years to get it allotted. So a car which cost Rs 18 to 20 thousand [Yes! it was only that much - but who had money those days?] and used to be resold at a premium of about Rs3000 after 3 years of use. What an investment.

The other thing is that very old cars are suddenly at a premium with so many people running around trying to buy them and restore or make it something like a used Batmobile out of them. Looks like the market is maturing!

[libranof1987]

Now, RBI joins in the party :

RBI asks government to deregulate diesel prices - The Economic Times