[RavenAvi]

Not only car leasing, but the used car market is also going to face a hit come July 1st, according to a new report by ET Auto.

Though there is still some uncertainty, industry executives said they expect the levy under GST to be the same for both used and new cars. That would mean a used-car buyer will have to cough up 20-33% more than the existing rates. The current levies — value-added tax and sales tax — on used cars range from as low as 0.5% to 14.5% depending on the state. Under GST, the rate on passenger vehicles is 28%, plus a 15% cess on large cars and utility vehicles.

According to industry executives, at that rate, the cost in the second-hand or preowned market could increase by Rs 5,000-50,000 to as much as Rs 1 lakh in the super luxury space. If the tax is indeed 28%, India will be among the countries levying the highest GST on the pre-owned segment, one of the executives said.

“While we welcome the government's move to streamline the tax structure applicable to used cars, however the unintended outcome of the proposed GST structure for used cars may motivate the used car market to move towards the unorganised sector and or customer-to-customer transactions,” said N Raja, senior vice president for sales and marketing at Toyota Kirloskar. “This may not only harm the customer interest, but may also adversely affect the overall tax collected from this sector.”

[vsrivatsa]

After having gone thru how much confusion prevails and how many scenarios exist regarding which the Govt. possibly needs to revisit and clarify - it looks like they are rolling out GST in a hurry.

More so just to claim that they hoisted the GST flag while the citizens are made to suffer...Well..I guess all we have is the illusion of "ache din" and that it would arrive as always in the "near future" ?!

Also why did the Car Lease companies sit silent all these days till the last month? Could they not have approached the Govt. earlier?

Hoping the FM will provide a fair judgement for the issues related to car lease, pre-owned cars etc on 30 June...

[yatin]

Originally Posted by M00M

All i have been trying to say is that a learned finance minister should have tried to make a distinction between a real technology and a false masquerade of the technology and created different segments for both and clearly laid down the law.

...

Auto sector has seen little reforms or help with legislation from the government side in atleast the last 10 years...

The decision about hybrids looks justifiable as I think about it more.

In discussing hybrids, I think we have been putting the cart before the horse.

Why should hybrids be promoted? To reduce pollution. What did the manufacturers do? They made a little more money by selling a few more luxury-segment cars!

I think the government took a policy decision earlier, and now has every reason to view it as a missed opportunity by manufacturers to mainstream hybrids & use it to their tax advantage.

[sanchari]

There is a change.org petition going around asking for realistic rates on car leases in GST regime. Don't know how much of an effect it would be.

Mods, I am not sure if I can post such petitions. If its not allowed, please delete this post.

[volkman10]

With hybrid's taking the brunt of GST, companies are tweaking their plans and may withdraw some models.

- BMW i8 could be on review, BMW plans to review all its hybrid plans for India.
- Honda too will review its hybrid plans - Jazz Hybrid is to launch in international markets soon.
- Toyota will be keenly looking at the Camry sales and will decide later
- Hyundai will review its Hybrid plans with the new structure.
- Maruti Suzuki is likely to withdraw its SHVS variants, also now the SWIFT (full hybrid) slated to go on sale in 2018, will not be launched in India.


LINK

[M00M]

Originally Posted by yatin

The decision about hybrids looks justifiable as I think about it more.

In discussing hybrids, I think we have been putting the cart before the horse.

Why should hybrids be promoted? To reduce pollution. What did the manufacturers do? They made a little more money by selling a few more luxury-segment cars!

I think the government took a policy decision earlier, and now has every reason to view it as a missed opportunity by manufacturers to mainstream hybrids & use it to their tax advantage.

Think I sincerely disagree when it comes to taxing hybrids more. You see every new technology needs to be mass made to make it affordable. I agree that manufacturers should've been quick to bring it to lower cars but it takes time. Hybrid jazz and hybrid corolla just launched a year ago. Also these manufacturers don't bring products to India unless they know it will work at a price point. Will you spend 20 lacs for a hybrid jazz I don't think so.

If you were to start a business invest crores and then GOI says ok now we are taxing it at x % more than before it makes it unviable for consumer to purchase and unviable for you to sustain sales as no one will purchase.

Most of the luxury cars sold are diesel due to better fuel efficiency, German Diesel engines are better and the fact that sometimes they don't provide petrol alternatives. With hybrids that chance for a consumer who didn't want a diesel and occasionally used his luxury car existed - now with this heavy tax that possibility is going to go. Lexus IS all hybrid except top SUV so now I expect Toyota to review all plans for India.

Do you realise we went from a petrol market to a diesel and back to petrol in less than 10 years, these sort of changing dynamics make it difficult for manufacturers and that also without proper legislation from the government side.

It's a missed opportunity in my opinion they should've made hybrid GST 15% or so, so that Honda / Toyota / others would've got the jazz hybrid, corolla hybrid, etc to India and slowly but surely in 5-7 years we would see normal petrols being replaced by hybrids which would've meant that by 2030 market would see a slow movement towards electric (another target which is ambitious but achievable if right steps are taken in my opinion.). Just my thought process, you can obviously agree to disagree.

[volkman10]

GST impact on Auto Industry !

However, it still remains to be seen whether car manufacturers will pass on the entire benefit of this overall drop in taxation rate to customers. For example, we believe that while the Toyota Fortuner would benefit from a 12 percent drop in total taxation, Toyota is expected to drop prices by only about 7 percent.

Link

[yatin]

Originally Posted by M00M

Think I sincerely disagree when it comes to taxing hybrids more. You see every new technology needs to be mass made to make it affordable. I agree that manufacturers should've been quick to bring it to lower cars but it takes time. Hybrid jazz and hybrid corolla just launched a year ago. Also these manufacturers don't bring products to India unless they know it will work at a price point. Will you spend 20 lacs for a hybrid jazz I don't think so.

If you were to start a business invest crores and then GOI says ok now we are taxing it at x % more than before it makes it unviable for consumer to purchase and unviable for you to sustain sales as no one will purchase.

Most of the luxury cars sold are diesel due to better fuel efficiency, German Diesel engines are better and the fact that sometimes they don't provide petrol alternatives. With hybrids that chance for a consumer who didn't want a diesel and occasionally used his luxury car existed - now with this heavy tax that possibility is going to go. Lexus IS all hybrid except top SUV so now I expect Toyota to review all plans for India.

Do you realise we went from a petrol market to a diesel and back to petrol in less than 10 years, these sort of changing dynamics make it difficult for manufacturers and that also without proper legislation from the government side.

It's a missed opportunity in my opinion they should've made hybrid GST 15% or so, so that Honda / Toyota / others would've got the jazz hybrid, corolla hybrid, etc to India and slowly but surely in 5-7 years we would see normal petrols being replaced by hybrids which would've meant that by 2030 market would see a slow movement towards electric (another target which is ambitious but achievable if right steps are taken in my opinion.). Just my thought process, you can obviously agree to disagree.

Good points, sir, but do you think there has been any hint that the manufacturers were moving in the policy's direction? Maybe localizing the luxury hybrid engines didn't make business sense ... so nothing has happened. Toyota, for instance, started manufacturing new big diesels!

When the carburetor got fuel-injected competition from Daewoo & Hyundai circa 2000, did they have tax benefits? People bought those cars anyway. I don't know if something similar can happen with hybrids, in a country that accepts diesel a lot more than other countries.

[arunramaswamy]

Originally Posted by M00M

It's a missed opportunity in my opinion they should've made hybrid GST 15% or so, so that Honda / Toyota / others would've got the jazz hybrid, corolla hybrid, etc to India and slowly but surely in 5-7 years we would see normal petrols being replaced by hybrids which would've meant that by 2030 market would see a slow movement towards electric (another target which is ambitious but achievable if right steps are taken in my opinion.). Just my thought process, you can obviously agree to disagree.

I humbly disagree with this statement. How long has it been since Toyota launched the Prius and Camry hybrids? I do not see any urgency in bringing the hybrid technology to corolla in India, whereas it has already been launched here in Australia last year. Compare this to the urgency shown by Toyota in localising Diesel mills for Fortuner and Crysta. I am sorry but Toyota just does not deserve any special treatment for their hybrids based on how much eager they have been to get this into India.

[M00M]

Originally Posted by arunramaswamy

I humbly disagree with this statement. How long has it been since Toyota launched the Prius and Camry hybrids? I do not see any urgency in bringing the hybrid technology to corolla in India, whereas it has already been launched here in Australia last year. Compare this to the urgency shown by Toyota in localising Diesel mills for Fortuner and Crysta. I am sorry but Toyota just does not deserve any special treatment for their hybrids based on how much eager they have been to get this into India.

Corolla hybrid was scheduled to launch in Diwali but plans are now on hold

[S.MJet]

Originally Posted by volkman10

GST impact on Auto Industry !

Thanks, this brings mush clarity now.

Two opposite impacts in mid volume segment.

1. Ciaz and Ertiga will become expensive by Rs 1.5L.
2. All SUVs will be cheaper by 12%

BTW will Scropio be able to get the 12% benefit? IIRC they were already taking some benefit by artificially lowering the ground clearance to 165 mm.

[bharanidharang]

Originally Posted by S.MJet

Thanks, this brings mush clarity now.

Two opposite impacts in mid volume segment.

1. Ciaz and Ertiga will become expensive by Rs 1.5L.
2. All SUVs will be cheaper by 12%

BTW will Scropio be able to get the 12% benefit? IIRC they were already taking some benefit by artificially lowering the ground clearance to 165 mm.

Any idea how S-Cross is categorized ? The dealers while trying to push stocks are all of the opinion, price will increase.

[volkman10]

Originally Posted by S.MJet

1. Ciaz and Ertiga will become expensive by Rs 1.5L.
2. All SUVs will be cheaper by 12%

Yes the Diesel variants (SHVS) of CIAZ and Ertiga will get the increase. However Maruti Suzuki is likely to bring back regular diesel variants of Ciaz and Ertiga.

This new GST norm might just push Maruti Suzuki to discontinue the SHVS tech, and re-launch the diesel variants minus the SHVS tech

Link

[S.MJet]

Originally Posted by bharanidharang

Any idea how S-Cross is categorized ? The dealers while trying to push stocks are all of the opinion, price will increase.

As per the chart posted by Volkman10 above, all cars except Hybrids (including mild hybrids) are likely to cheaper ranging from 1.7% to 12%.

If the anticipated price increase was to be true, why dealers would be so eager to sell at lower price, looks like just a gimmick to clear existing stock.

[prabhuferrari]

Originally Posted by S.MJet

Thanks, this brings mush clarity now.

Two opposite impacts in mid volume segment.

1. Ciaz and Ertiga will become expensive by Rs 1.5L.
2. All SUVs will be cheaper by 12%

BTW will Scropio be able to get the 12% benefit? IIRC they were already taking some benefit by artificially lowering the ground clearance to 165 mm.

Am I missing something here? Ciaz is like Vento, City, Verna right? as per volkman's chart it is to be cheaper by 8.6%. How will it get expensive?