Withdrawing of economic relief and its impact

ada · 17th January 2010, 22:35

With budget round the corner, and talks of economic revival, the moot question is will the government withdraw economic relief viz. decreased excise duty? I' am sure that the car prices will go up the moment excise duty is increased, and it is natural since all car manufacturers had passed on the excise duty cuts to the customer. If this is the case does it become a case of hurrying up your decision of buying a car? Please advise.

NetfreakBombay · 17th January 2010, 22:46

Profit margin of car companies used to be around 10%.

At present this is around 20% (as per last quarterly reports on NSE).

So, rollback of 2 -3% of excise rebate should not be a game changer.

anjan_c2007 · 17th January 2010, 23:01

Thats irreversible at least in the present situation. Maybe the car makers get some other relief in the form of cuts in duties of imported components and so on in the forthcoming budget.
We must know that auto makers have formed a very powerful lobby (SIAM) and are able to tremendously influence the making and unmaking of the laws of the land mostly to favour them.

ada · 17th January 2010, 23:04

@netfreak, do you mean to say auto-makers will absorb the excise duty increase and will not pass it on? I mean we are talking of an amount in the range of Rs.15-20 thousand for a 5 lakh vehicle.

Sudan_NFS · 17th January 2010, 23:29

I think if any one increases the price then all will increase the price giving the reason that excise duty is increased.I think we can't except a much change in this budget.

xingamazon · 18th January 2010, 11:50

I am guessing, just like the previous budget the government will not do much changes to the most of such items like cars.

Also note one point that all the government lobby recognises that the car is no longer a luxury item its slightly (though not fully) becoming a necessity for the middle class. Thus dont think it will be affected much.

sachinj12 · 18th January 2010, 11:57

Fiat has already increased the prices. Maruti has followed suit, though not very high, the increase ranges form 1k-10k. Out in today's TOI. Expect other companies to announce hikes in the following days.

17th January 2010, 22:35	#1
ada BHPian Join Date: Jun 2009 Location: MUMBAI Posts: 184 Thanked: 50 Times	Withdrawing of economic relief and its impact With budget round the corner, and talks of economic revival, the moot question is will the government withdraw economic relief viz. decreased excise duty? I' am sure that the car prices will go up the moment excise duty is increased, and it is natural since all car manufacturers had passed on the excise duty cuts to the customer. If this is the case does it become a case of hurrying up your decision of buying a car? Please advise.
	() Thanks

17th January 2010, 22:46	#2
NetfreakBombay Senior - BHPian Join Date: Jan 2008 Location: Bombay Posts: 1,466 Thanked: 1,021 Times	Profit margin of car companies used to be around 10%. At present this is around 20% (as per last quarterly reports on NSE). So, rollback of 2 -3% of excise rebate should not be a game changer.
	() Thanks

17th January 2010, 23:01	#3
anjan_c2007 Distinguished - BHPian Join Date: Jul 2008 Location: India Posts: 8,335 Thanked: 20,656 Times View My Garage	Thats irreversible at least in the present situation. Maybe the car makers get some other relief in the form of cuts in duties of imported components and so on in the forthcoming budget. We must know that auto makers have formed a very powerful lobby (SIAM) and are able to tremendously influence the making and unmaking of the laws of the land mostly to favour them.
	() Thanks

17th January 2010, 23:04	#4
ada BHPian Join Date: Jun 2009 Location: MUMBAI Posts: 184 Thanked: 50 Times	@netfreak, do you mean to say auto-makers will absorb the excise duty increase and will not pass it on? I mean we are talking of an amount in the range of Rs.15-20 thousand for a 5 lakh vehicle.
	() Thanks

17th January 2010, 23:29	#5
Sudan_NFS BHPian Join Date: Aug 2009 Location: chennai Posts: 759 Thanked: 16 Times	I think if any one increases the price then all will increase the price giving the reason that excise duty is increased.I think we can't except a much change in this budget.
	() Thanks

18th January 2010, 11:50	#6
xingamazon Senior - BHPian Join Date: Sep 2009 Location: Chennai Posts: 1,400 Thanked: 121 Times	I am guessing, just like the previous budget the government will not do much changes to the most of such items like cars. Also note one point that all the government lobby recognises that the car is no longer a luxury item its slightly (though not fully) becoming a necessity for the middle class. Thus dont think it will be affected much.
	() Thanks

18th January 2010, 11:57	#7
sachinj12 Senior - BHPian Join Date: Nov 2009 Location: Los Angeles Posts: 1,187 Thanked: 168 Times	Fiat has already increased the prices. Maruti has followed suit, though not very high, the increase ranges form 1k-10k. Out in today's TOI. Expect other companies to announce hikes in the following days.
	() Thanks