[Motard_Blr]

I just came across this article in Live Mint:
http://www.livemint.com/Companies/27...re-sedans.html

The argument made by the author makes sense but now that several manufacturers have invested a lot money developing sub-4 metre compact sedans, I wonder how they will sell them if the main advantage they have now , the price differential with larger sedans, disappears overnight. Will they still sell them as before or will they sell them as hatchback plus models or will they sell them as sedan minus models?

GST is turning out to be a big spanner in the works for many industries. How those industries will adapt to the changes will be indicator to their very survival.

[RavenAvi]

I disagree.

For one, sub-4 metre sedans are a big hit in Tier II/III cities where aspirational value clearly takes precedence over everything else. Even in Tier I cities, relentless traffic congestion and ease of parking are big factors.

A separate boot, even a chopped one, has more pulling power than a power-packed engine in our market.

If anything, the sub-4m segment will rise in the near future, because the chopped sedans are being joined at an alarming rate, by chopped crossover SUVs!

Unless the sub-4 meters rule is completely done with, I don't see any big changes happening in this segment.

[Muski]

Even though it may seem so that Sub Compact Sedans will lost out, I think there are a lot of things which will make them relevant for quite some time.

1. As OP mentioned lot of research has already gone in, products are fiercely competitive and lapped up by the market. Even though tax incentive will go away, demand will still remain.

2. We have huge parking problem in India, personally I know of a case where Amaze was bought instead of City as the said persons house (Faridabad) could not accommodate the proper sedan comfortably (Jazz was refused due to prevalent sedans are better than hatchback thinking .. social prestige issue)

3. Also, in my opinion artificial legislative tax incentive was a hurdle in entry of many cars in India. Yarris is 4.1m in length, i25 is 4.2m, i30 is 4.3m all these excellent products were facing an entry tax disadvantage, which will go away and will lead to further maturing of the market.

In the long run, this will have a real positive impact in India.

Even Indian manufacturers now can build to international standards. I really like Kite and was thinking it would have been a real looker if it was a bit longer, I guess going forward this shouldn't be an issue.

[avdhesh15]

Originally Posted by Motard_Blr

I just came across this article in Live Mint:
http://www.livemint.com/Companies/27...re-sedans.html

Quote from the article: The suggested tax structure under the model GST law is different and proposes a dual duty structure—18% for non-luxury cars and 40% for luxury cars.

Any idea on the definition of non-luxury and luxury cars?

[Nav-i-gator]

A lot will depend on how much tax benefits are passed on to the customers. Big players like MS & hyundai are most likely going to reap more moolaah for themselves, at least in near future by continuing to carry price differential on compact sedans and full sized ones. While marginal players, esp ford (who are more serious contenders than also ran's like GM) might push harder for their bigger models.

I believe, models like Linea & vento might get another run, among existing sedans.

[Motard_Blr]

Originally Posted by avdhesh15

Quote from the article: The suggested tax structure under the model GST law is different and proposes a dual duty structure—18% for non-luxury cars and 40% for luxury cars.

Any idea on the definition of non-luxury and luxury cars?

It seems that the present definition of small cars will hold. So anything longer than 4 metres and 1500 CC or larger will be called a luxury car.

[BeantownThinker]

Well, we see a deluge of sub 4 meters cars only for the reason that the manufacturer was getting a benefit by way of reduced duty. Now if that benefit disappears then the manufacturer is no longer constrained to producing just sub 4 meter cars.

I for one will be happy if the manufacturers are no longer constrained by this sub 4 meter rule and they will be free to design cars as they want. Hopefully, all the quirky and ugly sub 4 meter cars will disappear.

The main reason why even the consumers were buying these cars was because of the price.

[hybridpetrol]

It is due to the attractiveness of the tax slabs, the manufacturers have ventured into building sub 4m cars with 1.2L/1.3L engines. They are also able to give this at a very competitive starting prices of about 6L OTR starting price for these compact sedans.
However, on the other hand, C2 sedans such as Honda City will come around 8.5L for a base model, due to the factors such as the bigger engine, large dimensions and the materials that go inside the car, and also the increased tax structure.
Those who are really cost conscious, but want to buy a sedan would prefer buying a car that gives all the latest features, and also within the pocket - So, a top model Amaze Diesel makes more sense than the base model City Petrol for them.

IMHO, Government will continue to provide incentives to sub 4m cars, as these create less congestion compared to bigger cars. Even if they remove the incentives to sub 4m cars, they would probably penalize bigger cars to discourage ownerships.

[Nav-i-gator]

In near future, we may see existing compact cars coming with bigger engine options. Long term, car designers will not be constrained by 3999mm length and hopefully, will bring better proportioned cars. Still compact enough, but well proportioned.

Offtopic: would GST help in doing away from the need of re-registering the car when you change states?

[IshaanIan]

Am I the only one who now hopes that we will start having proportionately designed yet small sedans? Something like the old Fiesta was the perfect size and didn't need to look stupid. I hate how cars are just growing and growing and growing in size these days.

[Superleggera]

I am happy if the sub 4 meter rule disappears and designers gets freedom to make good looking cars..

While I have no questions on the practicality and value propositions of the sub 4 meters cars, all of them (well,almost) looks ugly and mis-propotioned. It is a sad state to see Indian roads filled with these ugly ducklings where the designers could have turnover then to real beauties if the Indian govt change the limits slightly above 4 M.

[Raj1982]

I don’t feel the tax benefit will be withdrawn overnight. Manufacturers will get a sufficient amount of time to clear their inventory. The compact sedan was never meant to give the level of satisfaction of a sedan. In many cities, owning a sedan is a status symbol.

Sometimes buying a proper sedan is out of their budget. So they end up buying a compact sedan as they don’t have to pay more but still can own a sedan, no matter how ugly it looks. With the increasing demand for premium hatchbacks I don’t feel manufacturers will be investing more on compact sedan even if the tax benefit continues. After the success of Ecosport and Brezza, I think the compact SUV segment is going to rule for next few years.

[Chetan_Rao]

I just hope this doesn't become a race to the bottom of a different kind. Full-size sedans (>4m) with puny engines tuned for efficiency. How about that!

[RajaTaurus]

Originally Posted by Superleggera

I am happy if the sub 4 meter rule disappears and designers gets freedom to make good looking cars..

While I have no questions on the practicality and value propositions of the sub 4 meters cars, all of them (well,almost) looks ugly and mis-propotioned. It is a sad state to see Indian roads filled with these ugly ducklings where the designers could have turnover then to real beauties if the Indian govt change the limits slightly above 4 M.

Second that. Moreover these cars and mini SUVs without bumpers are spoiling the car design aesthetics and safety in the name of 3,999 mm length.!

[Motard_Blr]

Personally, I love the way the Laura and Octavia are still hatchbacks but look like sedans. I think that they are called notchbacks. I think that this is the best compromise between lugggage space, looks and practicality. Sadly, no one else is doing that, choosing to stick rigidly to the definition of a conventional 3-box car.