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Old 2nd January 2007, 10:24   #1
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Default Large cars may come to you at a smaller price

NEW DELHI: If you are planning to upgrade to a bigger car, here's some good news. The ministry of heavy industries is pushing for a excise duty cut from 24% to 16% for large cars. This means that a host of mid-segment cars such as Maruti Esteem, Tata Indigo and Honda City may give a major boost to sales figures.

The proposal has been made to boost investment in the sector so as to double its contribution to the GDP from $72.5 billion to $145 billion by 2016. As per the Auto Mission Plan (AMP) 2006-2016, the government wants India to overtake China in this segment, which recorded maximum growth in the production of automobiles (including cars, MUVs and two wheelers) from 15.82 lakh units in 1997 to 46 lakh units in 2005. India stands second to China in this sector in the Asia Pacific, with production rising from 7.7 lakh units in 1997 to 15.8 lakh units in 2005.

While the ministry has taken this view on the basis of the AMP and the auto policy, industry associations like the Society of Indian Automobile Manufacturers (SIAM) have asked for a uniform excise duty for both small and big cars.

Their reasoning is that large cars and mid-segment cars will become more affordable to consumers once the excise duty is brought down to 16%, the prevailing rate for small cars. In effect, though the large car will cost more, the price gap between small cars and large cars will drop considerably.

On the other hand, the Automotive Component Manufacturers' Association of India (ACMA) has sought a excise duty cut on small cars in its pre-budget recommendation to the ministry of heavy industries, while remaining silent on the issue of large cars.

The ministry has sent its pre-budget suggestions to the finance ministry and the government is likely to take a final view in the coming month. The ministry of finance isn't very supportive of a duty cut on cars, sources said. So far, the automobile sector forms a major chunk of excise duty collections for the department of revenue.

However, with the auto sector heating up and with the entry of new players like Mahindra-Renault, a duty cut is likely to attract more partnerships and investments.

Source: The Economic Times

---Soon To Own Bigger Cars
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Old 2nd January 2007, 12:29   #2
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But will the car manufacturers pass the benefit to customers
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Old 2nd January 2007, 14:46   #3
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But will the car manufacturers pass the benefit to customers
They always do. They wouldnt want to waste an opportunity towards larger volumes.
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Old 2nd January 2007, 15:18   #4
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i had a query. will someone explain how exactly a duty cut of 24% to 16% will change the price of the car. A real example would be welcome please.
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Old 2nd January 2007, 15:30   #5
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M800 - ex factory price - 1.40 L + 24% E.D = 33.6K + S.T etc
+ 16% E.D = 22.4K + .....

a clear saving of 11.2k on the excise duty alone. the other taxes will also get proportionately lower. SOmetimes these savings are passed on to the dealers, sometimes to the consumers & sometimes to both. we will have to wait & see if a cut is actually made & if so, who is the benefactor.

p.s. hey geeksrik, you are geekier than i thought. LOL
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Old 2nd January 2007, 16:11   #6
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They may be reducing he excise duty but somehow we will pay the same price because every year car manufacturers increase the prices by 5 - 10K and then budget is passed and excise duty is reduced and but still the price remains same..
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Old 2nd January 2007, 16:18   #7
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Just wondering, wouldnt this be pretty much negated by the increase in the insurance rates coming into effect soon?
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