Team-BHP - Budget 2016 & Indian Cars: All you need to know

Thanks GTO for putting up the impact of Indian Budget '16 in a nutshell from the automobiles sector perspective. :thumbs up

Hope that when some manufacturers trying to reduce the price of >10L variants of their vehicles to <10L variants, do not delete some of the features offered in the vehicle.

Now, I guess all the manufacturers will try to introduce something like micro-hybrid, mini-hybrid, <something>-hybrid in order to evade the tax hikes in the future. And Maruti Suzuki might be laughing their heart out somewhere. :D

Very well summed up GTO. Makes it crystal clear regarding new tax laws for auto sector. Disappointed to see no benefits for Electric/Hybrid category apart from not applying the additional cess/tax.

Agreed that mild hybrid does not make much of difference and might just be a gimmick to increase fuel efficiency and get some tax benefits. But they may act a seed for development of fully hybrid technology where Indian manufacturers are lagging far behind right now.

There are a few interesting things happening within 24 hours of this budget being unveiled. For one, apparently most manufacturers have stopped billing cars from the factory as of last evening. This will remain frozen till some clarity is obtained. Most of the dealerships are on the standby. If you try to book a car they will only accept it provisionally with the caveat that the new prices will apply. Most of them tell you that they don't have any stocks with them in their yard (unless you know the higher ups in the dealership who are willing to play ball).

Another interesting aspect that someone who will not like to be quoted told me is that do not be surprised if you suddenly find the features list in some of the XUV models and top Scorpio models change/reduced and the Brake Energy Regeneration start showing up in these models. Currently the XUV W10 and W10 AWD have this technology in them.

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Originally Posted by Zappo (Post 3923240)

Another interesting aspect that someone who will not like to be quoted told me is that do not be surprised if you suddenly find the features list in some of the XUV models and top Scorpio models change/reduced and the Brake Energy Regeneration start showing up in these models. Currently the XUV W10 and W10 AWD have this technology in them.

Might not be because Mahindra's system is not considered a Hybrid in any way so they are not really getting any benefits.

On the other hand, Maruti seems to be doing something additional with the SHVS system which they claim actually gives some assist to the engine. This gets them the Hybrid tag.

The Budget did mentions that these Hybrid cars will not get the additional 1% cess however whether this applies to real hybrids like the Camry or to other small SHVS systems remains to be seen.

The budget is again a very hard attempt to suppress diesel cars and especially SUV's.

Thank you for this brilliant post GTO. This post coupled with other discussions about the budget would help me immensely for the upcoming b-school admission group discussion and interview if the topic of budget 2016 is in question. This has once again proven to me that Team-BHP is more than just cars it's a forum for discussion first. If Maruti gets the SHVS on Swift Diesel and then on Petrol variants technically they would check the Hybrid box as Axe 77 and Dr. Singh just pointed out. This should be interesting.

Quote:

Originally Posted by GTO (Post 3923052)

[*]From June 2016 onward, an additional 1% tax will be collected at the source (i.e. dealership) on all cars costing over Rs. 10 lakh.

My friend had planned to buy a XUV 500 W8 in June this year. Looking at the turn of events he called up the Mahindra dealerships in Bangalore, today morning.

They said that the incremental taxes are effective immediately on all new bookings and they are awaiting new prices from Mahindra.

Suddenly, for the 'mango man' it makes great sense to have a Zoomcar or other self driven rental car instead of 'owning' a >4m sedan or a SUV.

The sub 4 meter sedan and premium hatchbacks of lesser capacity petrol engines are the least impacted in this budget, why ? because this additional cess of 1% is nothing from an EMI perspective. Small cars will do just fine.

All in all, I liked the budget, makes sense to spend more on rural areas especially when oil prices are down and rainfall is scanty.

Kudos to FM for introducing the TCS scheme for tax at the source on sale of cars costing above 10 lakhs. This will ensure that people who were not paying income tax but buying luxury SUVs will now at least pay some tax. And genuine tax payers will not be affected by this, though they might have higher cash flow for some time. I hope companies change their systems to recognize this TCS and reduce the income tax TDS for employee. Otherwise, the poor chap has to wait the whole year before he can claim refund. :)

It needs to be seen how this will be implemented. Will the vehicle buyer be asked to present a separate cheque for the tax amount to be deposited in a designated TAX account or will the dealer club everything together and later do the remittances to the governemnt accounts?

The latter case will put a lot of working capital in the hands of dealers and good dealers will have good amount of cash to play around for some time leading to reduction in their working capital requirement. Will this lead to lesser bank borrowing or will this lead to manufacturers push the dealers more as they have more cash headroom to play with?

It needs to be seen how TCS system will work in case the vehicle is bought in the name of a company or an organization. Will they also have to pay tax and claim TCS?

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Originally Posted by sidzz (Post 3923282)

Incremental cess is applicable immediately (from Mar 1). Tax collection at source is applicable from June 1.

So if he books tomorrow, he will be subject to the additional cess (most likely assuming that he is not able to get a vehicle already in transit); but will not be subject to TCS. If he books in June, he will be subject to the cess as well as TCS.

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Mild or Mirco, is a hybrid. So any car with this technology will be spared from the new "Infrastructure cess". M&M will benefit the most. I think all M&M vehicles will come with Micro hybrid as standard soon. Maruti may also implement their SHVS on most of their products from Swift to S-Cross.

One question - Will Maruti increase the prices of Ciaz & Ertiga since the Government has stopped the incentives for EVs & Hybrids?

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Originally Posted by GTO (Post 3923055)

The Price Impact:

It's cars over 4 meters in length or engines bigger than 1.2L P / 1.5L D that will see a greater impact. The Etios petrol, Maruti Ertiga, VW Vento, Mahindra Thar and gang just saw their prices shoot up by 4%. On a Rs. 9 lakh Skoda Rapid, the tag is heavier by Rs. 36,000.

Any car over 10 lakhs is usually over 4 meters in length and / or has bigger engines. These cars will attract not only the 4% infrastructure cess, but even the 1% TCS (tax collected at source). Again, remember that the TCS will be credited back to you at the time of paying your income taxes. Still, the net 5% hike means that your outflow for a Honda City has increased by Rs. 50,000. The same for an XUV500 AWD AT is a lakh! Eyeing a C-Class? Be prepared to shell out about 1.5 - 2 lakhs more at the time of purchase. An E-Class? Between 2.5 - 3.0 lakhs. S-Class? You probably won't bother with such small details.

Does the Honda City - V MT priced at an ex-showroom 8.95L Mumbai fall under the 4% infrastructure cess as it has a mention of small petrol cars up to 1200cc and diesel cars up to 1500cc.

What about 1500cc petrol engines that fall under 10L ?

Declaring as Hybrid is not enough to get FAME benefits. The level of benefit also differs based on mild/strong/plug-in and pure electric type.

Quote:

In four-wheelers, the incentives range from Rs 13,000 to Rs 1.38 lakh, while in light commercial vehicles it is from Rs 17,000 to Rs 1.87 lakh, and for buses it is from Rs 34 lakh to Rs 66 lakh.

Source: http://pib.nic.in/newsite/PrintRelea...x?relid=118088

The car has to be then tested and homologated by test centers identified by the government. More details in our FAME thread: http://www.team-bhp.com/forum/indian...cture-evs.html

The existing incentives have not stopped. It is just that there are no fresh incentives this year. Additionally, the cess introduced this year will not apply to those cars that fall under FAME scheme.

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Originally Posted by RoadSurfer (Post 3923329)

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Originally Posted by Axe77 (Post 3923129)

Do I again see Maruti smiling at the loophole for diesel cars like Ertiga, Ciaz etc that slip-in claiming micro hybrid benefits. I say "slip-in" because honestly I perceive cars like Prius, Reva and Camry as genuine hybrids with Ertiga, Ciaz etc really only checking the technical box on this front.

I was worried during the budget session as the car Industry was asking the Government to scrap cars older than 15 years. I had recently poured over 2.5 lakhs on my close to 13 years Fiat Palio GTX. Nothing that sort of thing happened.

But its hugely disappointing that the Government has introduced the CESS on cars from 1% to 4%. This is a clear case to suppress the sales of SUV and also raises the question as to how this CESS will be spent in future.

Regards