[rajeev k]

Whosoever in the Government machinery thought of the excise benefits for a car shorter than 4 Mtr has to be complemented as he set the wheel rolling for a slew of activities in the Indian car scene. The Indigo CS broke the ice and Maruti followed and the new Dezire set the sales charts on fire. Now the Logan and mini Xylo are waiting to burst upon the scene. At this juncture it would be interesting to know the think-tank behind the scene.

[simplyself]

The government's main concern was easing the traffic congestion and lower fuel consumption by the smaller cars with its multiple benefits.

This decision brought cars within the reach of many more families, so the increase in the sale of cars would fetch the Govt the excise.

I have heard - but couldnt right now recollect - that this kind of benefit or some other incentives are given in countries which have high incidence of cars/personal vehicles.

However, one must appreciate the fact that it is being applied here.

[libranof1987]

I've been wondering about this issue since long; would like to know the rationale behind it.

Originally Posted by simplyself

The government's main concern was easing the traffic congestion and lower fuel consumption by the smaller cars with its multiple benefits.

Majority of the cars on the Indian roads are hatches (anyway sub-4m); how does excise rebate on sub-4m sedans change things drastically?

[mtnrajdeep]

The idea of the 4m, 1200cc engine limit was to encourage manufacturers to develop products for Indian regulations and manufacture them in India. Since the Indian small car market is the place where the action is, creating rules that are specific to India meant that the manufacturers had to try and take advantage of these rules by adhering to them.
As the market for these products was also mostly in India and is extremely price-competitive, it also helped that they could reduce prices by manufacturing them here and thus helping in improving the economy through increased employment in this sector apart from making India the global hub for small car manufacturing.

[gvivek75]

To the size limit mentioned here, I would also like to add the limitations on cubic capacity - again not a bad idea. Car makers on their own would have been happy selling inefficient large displacement models had it not been for such externally imposed (dis)incentives.

Classic example of this is Japan's keijidōsha (Kei car norms) which brought all sorts of innovations like forced induction, rotary engines and the legendary VTEC in its various forms into the mainstream. In the context of India the badly planned cities and bursting at seams traffic definitely needed compact cars for the masses, not to mention highly efficient small displacement engines for the cost conscious buyer. If car manufacturers are serious about our market's potential, let them find ways to innovate

[Rahulkool]

I think several more such rules are needed. Like for cars smaller than 3meter with less than 600cc engines. This will encourage car makers to develop cars for Indian market. I think smaller cars should be taxed less or bigger cars more, which will help reducing the traffic. It should be planned properly by people who know about cars.

[TaurusAl]

But where is the consumer benefiting ? The new Swift Dzire is costing more than bigger Dzire sold earlier. It is only the company benefiting as they are selling a smaller car with almost same pricing.

[wild child]

Originally Posted by rajeev k

The Indigo CS broke the ice

Oh ?

Indigo CS? Are we forgetting the Hyundai Accent Viva here ? It was launched long back even before the Indigo CS project was conceived !

Cheers

[kartikk]

Originally Posted by wild child

Oh ?

Indigo CS? Are we forgetting the Hyundai Accent Viva here ? It was launched long back even before the Indigo CS project was conceived !

Cheers

Accent Viva is more than 4 mtrs in length

Technical Specifications: Hyundai Accent VIVA CRDi - CarWale (other varriant)

[Coolman]

In the 2006 Union Budget, the then finance minister P Chidambaram gave special benefits to small cars to boost local production and to promote India as a global small car manufacturing hub.

Details here:

The four-metre race - Economy and Politics - livemint.com

Thanks,
C_

[rajeev k]

Originally Posted by wild child

Oh Indigo CS? Are we forgetting the Hyundai Accent Viva

That was before the subsidized duty regime was introduced. See Kartik's post also.

Originally Posted by kartikk

Accent Viva is more than 4 mtrs in length

Originally Posted by Coolman

In the 2006 Union Budget, the then finance minister P Chidambaram gave special benefits
The four-metre race

Many Thanks.

Originally Posted by TaurusAl

But where is the consumer benefiting ? The new Swift Dzire is costing more than bigger Dzire sold earlier. It is only the company benefiting

Indigo Cs costs less. Ultimately the manufacturer decides to pass the benefit to the customer or not.

Ambassador is under the scalpel for quite some time and perhaps would make an appearance soon. Manza is also slated to undergo surgery.

[sarathlal]

Its high time, the Govt gives incentives for environment friendly vehicles, like the Hybrid's, instead of the gimmics based on length etc. Atleast tax benefits should be given for people to invest in the Hybrids.

As some of the friends already mentioned, in India, majority of the cars sold are anyways hatches, so these sub 4 mt are not going to do any pathbreaks.

[wild child]

Originally Posted by kartikk

Accent Viva is more than 4 mtrs in length

Technical Specifications: Hyundai Accent VIVA CRDi - CarWale (other varriant)

Hi Kartikk

Thanks for the details.

In that case, do you know for what reason was Viva launched? Also, what about Peugeot 309? Website says the car was 4050mm in length ( bumper to bumper ). Did it not enjoy the tax rebate?

Also, was the tax benefit for sub 4m cars introduced by our P.Chidambaram only which was then globalised? Was this available in the global market before the minister's announcement was made?

Requesting some clarification please.

[yosbert]

I really fail to understand any logic behind the 4 meter rule. I mean whats the exact purpose it is trying to achieve?
It would have been a lot more prudent to base the excise benefits on the fuel efficiency of the vehicle, rather than on some kind of magically conjured number for the length of the vehicle. If anything it has only given birth to some ugly vehicles as companies tried to fit their designs into the prescribed 4 meters.

[simplyself]

Originally Posted by libranof1987

I've been wondering about this issue since long; would like to know the rationale behind it.



Majority of the cars on the Indian roads are hatches (anyway sub-4m); how does excise rebate on sub-4m sedans change things drastically?

There wasnt a specific parametre like 4 metres or anything like that earlier. Now that the Govt had started encouraging smaller cars, there was a bench mark for what is a small car.

Even sedans started to shave off some flab and join the sub 4 metre category.

The measure was a boost to Indian auto industry and enticed people with reduced prices for smaller cars - more people bought cars ( other factors too contributed to increased demand).

Conventional wisdom is smaller cars are more fuel efficient and need less space. That may be one of the reasons for this move.