[canonball]

But even locally produced cars cost almost 120% more than their counterparts smells of fat margins i.e. Honda/Toyota/Fiat/Mercedes/BMW almost all! Not sure how this fits in with all the arguments given to defend 102% duties on imports!!?

[joshdrive]

Import duties are there with a valid reason. The duties force MNCs to setup plant here locally which generates tons of employment and revenue. India is manufacturing hub for some Auto majors today. One reason for this is the import duties. The protectionism is a a resultant of this and not the core reason.

[sbraj]

Originally Posted by joshdrive

Import duties are there with a valid reason. The duties force MNCs to setup plant here locally which generates tons of employment and revenue. India is manufacturing hub for some Auto majors today. One reason for this is the import duties.

As purchasing power of Indians increase, would we see luxury car makers also setting up plant here? Brands like Ferrari, Lexus etc?

Or, import duties do not matter to the luxury car buyer?

[aerohit]

Majority of people in the country are obsessed with anything that is phoron.

If there was no tax, your roads would be clogged with Land Cruisers, and "Accidents in India" thread would be flooded with such cars.

I dont think we want that.

[Speeding@160mph]

Highest volume of cars sold in India is in the sub 10lac segment - i would think close to 70%-?

Majority of cars in above segment are already homologated to a major extent thereby avoiding import duty costs. The manufacturing facilities for players in the above segment are already in place.

Everything CKD/CBU gets hit with the 118% duty - this segment is a fraction of the auto sales in India (Volume) but does earn significant income for the government. Hence, imho- the sales volumes do not substantiate the investment for this sector.

However, the Manufacturer will gain significant sales numbers by targeting the 10lac-20lac segment. With India's middle class growing at phenomenal rate & having the youngest population on the planet - the growth opportunities are endless if a corolla/civic can be priced at 8 lacs & accord/camry at 14!

- they still need to get their pricing strategies right.

[rjalihal]

They have high taxes on imports to protect the local auto industry. Its a protective barrier like mentioned earlier. The government by encouraging foreign companies to open shop here ensure employment to people as well. Moreover, there is a spill over effect as several support industries also spring up. So just by taxing import cars, they have created a lot of opportunities for the local population and that is a good thing. Sure enough we all crib, but for now we gotta make do with that. I think collecting revenue is the last thing on the government's mind as they have better sources. Its an ancient and very traditional way of defending national producers. Flip side is that the local companies get into a comfort zone and there is loss of efficiency and quality of their products. They do become cash cows though.

[acidkill]

Apart from employment and all government protectionism, the main reason why the high taxes continue to exist, is because of the auto industry lobby itself. Since most auto companies have invested alot of money into their factories, they basically want to ensure that their business is dictated by domestic trade patterns and is therefore is more predictable/less volatile.

Should such high tax barriers not exist, then then basically traders across the globe can play havoc with forex volatility and global unsold stock liquidation. While India has a fairly established and robust auto industry now (in terms of production capacity, marketing channels and A.S.S) , several players are still weary of global trade opportunists.

The downstream effects of these duties is the predictable growth in employment, investments in new manufacturing facilities and so on. Think of it as a firewall from industry nukers i guess.

I would also like to point out, that in some aspects placing 180% duty on high end cars is also symbolistic in nature - 'robin hood' policy of taxing luxuries. The government will never earn too much from that segment because of the relatively low volumes anyway.

[CPH]

Germany till recently was the worlds largesr exporter. This was always good news for the German economy.

India has got nearly 14 times the population, but is 12th largest economy in the world. Germany is ranking usually between second and fourth.

When you put the 2 economies in the right perspective, you will see why the Indian government puts up these taxes.

European cars cost a lot more than equivalent cars made in India. If you can get for one car build in Europe two cars built in India, what is the economical impact when losing the ales to the foreign car?

Not only that 2 cars less are being sold, but also that this money leaves the Indian economy. In due course it is not helping the stability of your currency, which in turn creates more problems.

If you buy too many German cars it will not only be bad news for your economy. If it goes further at one point there won't be the value of the currency, which will be then bad news for the German manufacturers and all others too.

You better keep the taxes and increase sales of your own production.

[eyedoc]

Originally Posted by canonball

But even locally produced cars cost almost 120% more than their counterparts smells of fat margins i.e. Honda/Toyota/Fiat/Mercedes/BMW almost all! Not sure how this fits in with all the arguments given to defend 102% duties on imports!!?

@cannonball you hit the spot , the locally produced /assembled CKD/SKD cars cost 120% more than their price in europe or america , close to their CBU value , albeit with less features

Originally Posted by aerohit

Majority of people in the country are obsessed with anything that is phoron.

If there was no tax, your roads would be clogged with Land Cruisers, and "Accidents in India" thread would be flooded with such cars.

I dont think we want that.

@ aerohit the only way to unclog roads in india is to make ownership of a 5-6 year old vehicle very expensive like in japan, 80-90% of cars on the roads are more than ten years old or more

[aargee]

TSK Sir, pls help me understand the following 2 points from your post

1.

Originally Posted by tsk1979

No, govt is not taxing anything to save our roads or reduce taxation. If that was the logic they would have taxed out all cars out of the reach of the common man.

2.

Originally Posted by tsk1979

If in the 1990s, import duties would have been slashed, the nascent auto industry would have been aborted before birth.

Originally Posted by tsk1979

So do not expect the duties to go anytime soon now.

^^^I sincerely wish it shouldn't come down for atleast 10 years

[joshdrive]

Originally Posted by canonball

But even locally produced cars cost almost 120% more than their counterparts smells of fat margins i.e. Honda/Toyota/Fiat/Mercedes/BMW almost all! Not sure how this fits in with all the arguments given to defend 102% duties on imports!!?

10 years back electronics were expensive in India compared to other developed countries. Today the margin has decreased substantially. The reason for these is multiple factors like volumes, govt policies,competition, these goods becoming commodity (today cell phone essential and it was a luxury 15 yrs back) etc,. Similar thing will happen to cars to as the volumes increase and there by competition. We are already seeing that the new hatches released are getting cheaper then existing ones.

We cant compare the prices of cars with Europe/US because of the sheer volumes they have there today.

[Caramelo]

for there foreign giants to start plants in india. they need the volume for it. for example polo is manufactured here but not the pheaton or the toureg. if you reduce the duties in one day. an audi Q7 will cost 25 lacs here. then who will buy the fortuner lolz. everyone will drive the big suv's and full size sedans. then who will drive the nano's (small cars)

they will make the investments only if they see their ROI coming back and if they see some money making potential.

now we are in midst of auto boom in india. volumes are picking up. and they have learnt the trick of the CKD. (local assembly). to avoid the sticker price shock.

i won't be surprised if they start manufacturing soon. but its still atleast 7-8 years from now.

[GTO]

I'm all for the high import taxes and FULLY support them. It's simple : If you want to sell 'em here, build 'em here!

[black12rr]

Originally Posted by GTO

I'm all for the high import taxes and FULLY support them. It's simple : If you want to sell 'em here, build 'em here!

Well ,the so called "GERMAN BUILT" tag be still there ? .Will someone buy MADE IN INDIA lambo?

[aargee]

Originally Posted by black12rr

Well ,the so called "GERMAN BUILT" tag be still there ? .Will someone buy MADE IN INDIA lambo?

Very funny, but makes me think; its true too; one good example is Rx100. All Rx's are good ones, but the models upto 89/90 are still considered as treasure due to Japanese engine.

I think they only say German engineering right?