[TusharK]

Members of the Society of Indian Automobile Manufacturers (SIAM) have met the Finance Minister of India to request the government to reduce the GST rate on automobiles from 28% to 18%.



Rajan Wadhera, President, SIAM has also reiterated the automobile manufacturers' stand. Two-wheeler brands, including Hero MotoCorp, are also in support of this proposal.

The auto sector is in the midst of an unprecedented slow down. Sales have been falling for the last few months. Several dealerships have gone out of business, while other have reduced their workforce. Automakers have also cut production as demand for vehicles has slumped.

Earlier this week, we had reported that according to SIAM, vehicle sales have dropped by 12.35% in April-June 2019 compared to the same period last year. In the 18-month period that ended in April 2019, 286 dealerships in 271 cities were shut down, resulting in an estimated loss of 32,000 jobs.

Link to Team-BHP News

[ani_meher]

If government reduces GST, I am sure states would hurry up to increase road tax and the manufacturers will increase their prices, so that in the end the consumer pays similar amount, with state and manufacturers earning more.

When GST reduced cost of vehicles, I remember MH government acting swiftly and increasing the road tax so that the costs of the vehicles bounced back to pre-GST levels. If at all consumer has to benefit, government should give tax subsidy directly to the consumer, and not reduce the tax. This can help to keep the tax reduction time bound as well. For example, for next 9-12 months, consumers will get TDS for 10% of the GST paid, and this can be reviewed periodically, so that it is stopped once the auto sales pick up.

[speedmiester]

Instead of asking the Govt to cut the tax, why can't manufacturers cut the prices by 10%, this will have the same effect.

[Shreyans_Jain]

Govt must not succumb to the auto lobby’s pressure tactics here. We are a country of 1.3 billion and as much as we want to deny it, only an elite few are car owners. Even then, our cities are horribly overcrowded with crumbling road infrastructure. Taxes on private cars should be kept high. Our roads just can’t accommodate more cars, and money is needed to improve public transportation.

I can understand tax benefits for electric cars. But GST rates should not be slashed for old IC engined private cars.

[rovingeye]

Originally Posted by speedmiester

Instead of asking the Govt to cut the tax, why can't manufacturers cut the prices by 10%, this will have the same effect.

Because then their lies will get exposed. Every few months they have hiked prices by 10-30K saying their inputs have become expensive necessitating a price increase. If they're able to cut costs now, it would mean they were lying earlier.

[vikramv1]

I agree... it is not about the tax here. The fundamental issue is that of the auto sector being greedy and increasing prices every few months that most cars have shifted price categories in the past few years. It's just plain unaffordable now and no longer value for money. Combine this with the fact that cars and bikes have a longer shelf life with owners, its coming back to bite the manufacturers. The government has no business reducing taxes.

[nsbhagwat]

The other big problem is dealer financing, that has dried up landing most of them into trouble. Dealers for Maruti as well are facing trouble with banks demanding additional collateral. This was not the way before.

The days of easy money are over.

[M00M]

I think GST should be reduced to 18% with a caveat that car manufacturers will not increase prices for 1 year or till April 2020. What Mercedes has done is that they have preempted this move and raised prices and now will drop prices if GST reduces so that they're prices stay the same as before and margins remain the same.

I think GST rationalisation is needed across the board but this is not the forum for that discussion.

What car manufacturers do is continuously raise prices and keep demanding lower taxes. Every 3-6 months I hear a BMW or Mercedes or Hyundai or Toyota dealer tell me that prices are going up.

[K_Drive]

IMHO instead of flat 28% GST, tax rate should be according to price cap.

Cars up to 5L - 10%
Cars up to 10L - 15%
Cars up to 15L - 20%
Anything above 28%

This will help middle class who opt for small family car.

[amit1agrawal]

I find it amusing that carmakers have jacked up prices by up to 50% in last 4-5 years and when sales started to hit them, they are running to govt like a cry baby to reduce the taxes.
First, they should reduce the car prices and if that still doesn't help then they should approach govt to help them by reducing taxes/subsidies, etc.

Yesterday, I check out the new Verna. Petrol Automatic top end is 16+ on road in Bangalore

[condor]

There have already been so many adjustments in the taxes. and input costs would have already come down. The auto companies have not reduced prices of cars accrued through this. And now they are asking to reduce GST ? Double standards ?

[twin_turbo]

Originally Posted by amit1agrawal

First, they should reduce the car prices and if that still doesn't help then they should approach govt to help them by reducing taxes/subsidies, etc.

Totally agreed. Cost of the car has increased at least 60-70% in the last 10 years. Service cost (oil, filter and other consumables) have come down but anything out of the ordinary, they bill us 15 times the price it costs them. Greedy i would say. But the fact is that most of these manufacturers are in losses or getting by with very less profits. So something is fundamentally wrong in the way automotive sector is operating i feel.

[oxyzen]

To everyone complaining to reduce prices instead of reducing taxes, here is a chart showing how much money the Govt Makes vs how much money the car manufacturers make for the sale of a car.

[nakul0888]

Originally Posted by Shreyans_Jain

Govt must not succumb to the auto lobby’s pressure tactics here. We are a country of 1.3 billion and as much as we want to deny it, only an elite few are car owners. Even then, our cities are horribly overcrowded with crumbling road infrastructure. Taxes on private cars should be kept high. Our roads just can’t accommodate more cars, and money is needed to improve public transportation.

I can understand tax benefits for electric cars. But GST rates should not be slashed for old IC engined private cars.

Oh that’s great. So let me get this straight. The govt “supposedly” taxes the crap out of a car buyer for “allegedly” building roads, infrastructure and what not for the greater society. The same govt fails miserably at its duty. And you are putting the blame on the car makers and people who buys cars for the shoddy job the govt does? How does this even make any sense? Why don’t you actually go after the party that is actually failing at its basic function?

Originally Posted by oxyzen

To everyone complaining to reduce prices instead of reducing taxes, here is a chart showing how much money the Govt Makes vs how much money the car manufacturers make for the sale of a car.

Good lord, just look at the proportion of the final buying price going into the govts coffers. I mean even mobsters wouldnt extort their victims like this. Just goes to show the prevailing mentality of those who run the govt towards its productive citizens.

[locusjag]

Amid all this clamour - albeit in the motorcycling world - Royal Enfield have launched lower cost versions of the Standard 350 & 350 ES.

I also saw news this morning somewhere that they have reduced their service costs by 40% and have increased their service intervals.

Is it time for Indian car OEMs to take a cue (or two) from Eicher's Royal Enfield, rather than crying for a GST rate cut? The closest that one of them have come to ding something like this was when Mahindra launched a cheap basic version of the XUV 500 earlier this year. It is time that the Indian auto OEMs realize that there are so many of us who like our vehicles functionally - and not in the margin-friendly and supposedly luxurious sense, with tinkering bells & unnecessary whistles.