[EP.]

Reducing duties on cars is a good news news. Considering the fact that India as moved from an underdeveloped nation to an almost developed nation, the govt should be reducing duties.

Take the 80s and early 90s, for example, when cars used to be luxury, and the govt charged for luxury by imposing taxes and duties; they had a good reason for it. Today cars are a necessity, fuel prices have gone up, and so has the cost of living. Its time that the govt had done something about this. But while reducing duties, govt has to ensure that local establishments don't take the road downhill.

A Merc S class or a BMW 7 at 50L or a Jag at 30L will be tempting, but not giving the Japanese a fair competition will be a bad decision.

[naj]

Originally Posted by Warhound

If manufacturers wont reduce the prices, whats to stop people from importing their own vehicles !?

Hi!

The Import duties were kept high so as to discourage auto imports to safe guard auto manufacturers, both national and multinational.I am surprised about this U turn in the govt policy. I feel that cbu imports may not be cheaper as the same variant is also made in India in some cases. This policy change could be for imports of auto components like engines ,ECU, etc which many multinational car companies are importing. May be the prices could come down this way.
But you see , the bottom line is profits and if the Indian buyer is buying a car at current price levels why will the cos lower the prices on account of reduced duties unless the government forces them to do so (read the excise benefits for sub 4m and 1.2 cc cars which have been passed on to the consumer)
I do hope that the import duty cuts are customer centric.

Cheers,
Naj

[moose56]

Wow this is a great news but i seriously doubt when it will get implemented in the Indian market and it would be unfair to the japanese car makers as well. I think we Indian are used to paying more for a car than its worth , Why cant a average Indian have a passat or accord as a car for his daily use like in Saudi arabia!

[manson]

Forgetting the set of four wheels for a moment, I can't stop to think of a 1198 priced below its Japanese cousins.
Listening to the mind though, this move will have a cascading effect and definitely affect the domestic players all the way down to the C segment. It may just have a positive effect for exporters though, garments, handicrafts, ayurvedic medicines, etc have been booming in the European markets for a while now. Lets see what gives.

manson.

[Ricky_63]

Originally Posted by mac187

Though, it is a good thing for the customer. I feel its not such a great thing for the Indian Economy. When the Japs/ Koreans spotted potential in India and built large factories providing employement and also developing ancillary units in India. These europeans didn't want to come here.

IMO, this deal is a boon for the european manufacturing Industry, a raw deal to Indian industry.

Possibly because at the time the Japs & Koreans came, the Indian economy was not at a stage where it'd be viable for the European companies products to be able to do the required numbers. What we got initially were very low spec cars & cheap (by today's standards) The Indian economy has now matured to a stage where people can & are willing to spend big bucks on fancy cars & other items of luxury.

Originally Posted by vinaydas

only people benefiting from the above is the companies themselves.
so don't expect to buy a 7 series for 35-50 lacs any time soon.

I do not agree with your POV, atleast going by what the newspaper reports.

Originally Posted by Sahil

There is no way the price of a 7 series/S-class,etc is going to come down to 50 lakhs ! Thats wishful thinking, even if duty is cut drastically the manufacturers will not lower prices to this extent instead they will pocket the hefty profit and avoid price corrections across their CKD line up.

When can we expect a final decision or action plan on the same? Time and again there are articles on duty and tax reductions on luxury cars but seldom does anything materialize out of them.

As per the newspapers that is what it may end up being. If the companies do not pass on the duty cut to the customer, the government will certainly not let them alone take the benifit, would they ? Let's see what comes out of it.

Originally Posted by swiftnfurious

+1 . I too feel the same. Since these cars which are already sold at the current prices [7 series for 85 lakhs & XC60 for 45 or so], I think the companies might keep it at the current prices and make a good profit out of it. Or say if the 7 series prices come down to 50 lakhs, what about the current customers who paid a whopping 85 lakhs? and similar for other brands.


And another question is even if the duties are taken off and the prices fall down drastically, will the manufacturers make the same profit with the reduced prices? ie, If there is 5 lakh profit on the 7 series selling at 85 lakhs and if the prices fall to 50 lakhs after this pact, will the manufacturer still make 5 lakhs profit?

Edit: Will this policy have an effect on importing the used cars from UK and all [the TR mode of importing] at reduced prices ?

The profit margin of the manufacturer is not reduced (from what I understand) the cut is on the import duty alone.

I do not think the cut is likely to be extended to used cars per se. Parts maybe.

Originally Posted by low_bass_makker

Saw this article on the front page of the new paper, is this true ???

Attachment 506120

Mods Ji please move the thread to the correct section.

This is the article under discussion. Thanks for putting up the scan

Originally Posted by VW2010

I beg to differ and feel this change will never happen. The goverment should protect and encourage manufacturers to set up plants inside india and thus enjoying reduced cost.

The reduction in import duty should be on the raw materials as far as i am concerned.

As it seems today, they are talking of an import duty cut, but what you said may also well be under consideration.

Originally Posted by .anshuman

+1 to what Sahil said above.

Even if the duty on the CBU cars comes down, the manufacturers might not lower the prices much to protect other locally manufactured cars in their line-up.

Mercedes S class at 50 lakhs and Jaguar XF at 30 lakhs is wishful thinking. Realistically i expect minor correction pricing of some high end CBU models, that's it.

Like I said above - if the duty cut is not passed on to the customer, why would the government let the companies have fatter profits ? Defies logic, but who knows.

Originally Posted by ACM

I some how don't see this happening this year or atleast to the scale predicted. The Players like Maruti, TATA, Mahindra, Hyundia would be severely affected if this were to go through.

Govt. though may do this in phases and we may see the first phase at this year budget.

Though Maruti and Hyundai are not really domestic players, they have made massive investments in India and do a lot of exports that contribute to our economy.

One line of thought suggests that this would affect only the premium segment players and none of the domestic players are strong in that segment, but that is exactly the point, TATA and Mahindra are attempting to enter the premium segment with vehicles like the Aria, the W201, etc, and with the recent technological acquistions are poised to introduce more such options in the coming years.

Yep one would love to see the XC60 around 25 but then the X1 would be closer to 18? and the the fortuner would be out of business.

You are correct, as the segment being targeted in the premium segment & the Maruti, Hyundai & tatas to not (yet) cater that segment, with the exception of the Santa Fe maybe.

Originally Posted by akshay1234

I really do hope it happens but I dont see prices coming down to those levels anytime soon. Maybe they will lower prices slowly over a few years. But at least we are heading in the right direction.

Agree with your POV

Originally Posted by tsk1979

All other industries are protected with an import duty ranging from 10% to 30%
Why should Auto manufacturers get a protection of 60%?
Yes I know protection of industry, development, Yada yada yada (Fill your essay here)... but then its a free market, and other industries are doing fine with 10-30% duty. Maybe its time the local mfrs stopped taking the customer for granted and started producing truly world class products.

Speaking of duty reduction, I am wondering what will happen to a German SUVs which would have cost 25 lakhs(medium sized products from VW stable etc.,) but now will cost 14-15L?

What about the 20L X1, is it CKD or CBU, I am not sure.

Your POV is well taken. Why do we not make local manufacturers up the ante ??

Originally Posted by harimakesh

Maximum Import duty at 30% is sufficiently providing protection for indian employment and investments.

It is time that Indian auto industries stop lobbying politicos with their license raj attitude.

Indian auto companies need to stand on to compete others with their quality product.

BMW 3 and X1 will cost less than 14L in such scenario.

Suzuki SX4 diesel at near 9 lakhs appearing to indians as VFM needs to come to an end.

It is hight time for these duty to be lowered.

Indians have all the rights to enjoy better cars at genuine price tag.

Agree in toto !!






Cheers

[the VTEC guy]

Have read in couple of news papers that this scenario is proposed and the Auto industry is split over it. SIAM batting against the reduction in import duties to protect home grown companies specifically in the entry level segment. This duty that is currently at 60% but ultimately turn out to be 110% when considered with other taxes. EU companies mostly German are backing the proposal. This reduction is long due and in discussion for many years. Instead of a one shot reduction I would propose a phase wise reduction of say 10% per year for next 3 years. This way it will not impact much on the second hand prices of the vehicles that are purchased at current rates.
Also to protect the Indian companies may be a cap needs to be considered either in terms of engine size or base price of the product.

[lurker]

If companies do not pass on the duty, then the individual buyer can well import the car directly, putting paid to any plans by any company to suppress the differential.

It is very important for the Govt of India to take this step, because all the car manufacturers across the board are really fleecing Indian car buyers with obscene and unrealistic pricing for what actually are sub-par and underequipped varients of equivalent cars being sold by them abroad. This dubious and corrupt practice has to stop.

[Warhound]

Originally Posted by naj

Hi!

I feel that cbu imports may not be cheaper as the same variant is also made in India in some cases. This policy change could be for imports of auto components like engines ,ECU, etc which many multinational car companies are importing. May be the prices could come down this way.

Cheers,
Naj

Naj,

The cars that are manufactured domestically will always be cheaper for the same model manufactured in Europe because of lower wages. What im concerend with are CBU units that are imported by paying high tariffs.

If the manufacturers dont bring the price on par with prices in europe, the customers will start importing their own cars and will bypass the dealers.

This is making no sense at the moment. It will stop manufacturers from setting up plants in India as for a few hundred cars sold/month who would want to invest in a whole assembly ?! and what about those players that have already invested ? I feel cheated both as a manufacturer and a customer !

[sohail99]

I feel that there should be no need to protect home grown companies!!

If they are using quality build material and top spec fit and finish, they shouldn't need to worry about sales!!

Its just that, mostly due to 'cost cutting'(which is more like removing parts while maintaining the same cost!) here, the normal person is charged more money per car. Whereas he can get a much better 'quality' vehicle from non home manufacturers!!

Btw will this affect the price of Mitsubishi EVO X?

[VW2010]

If they are using quality build material and top spec fit and finish, they shouldn't need to worry about sales!!

I guess the point here is not about the sales. But the additional benefit of employment and life to few lakh Indians. The same is not the case with non home manufacturers. Their own country employment rate will continue to grow and a chance to force these non home manufacturers to establish local plants will be lost.

[Ricky_63]

Originally Posted by Warhound

If manufacturers wont reduce the prices, whats to stop people from importing their own vehicles !?

Because they will not be allowed to import them at the same duty structure - that is strictly my understanding. AND one cannot legally import a car less than $40k billing price. So they cannot.

Originally Posted by EP.

Reducing duties on cars is a good news news. Considering the fact that India as moved from an underdeveloped nation to an almost developed nation, the govt should be reducing duties.

Take the 80s and early 90s, for example, when cars used to be luxury, and the govt charged for luxury by imposing taxes and duties; they had a good reason for it. Today cars are a necessity, fuel prices have gone up, and so has the cost of living. Its time that the govt had done something about this. But while reducing duties, govt has to ensure that local establishments don't take the road downhill.

A Merc S class or a BMW 7 at 50L or a Jag at 30L will be tempting, but not giving the Japanese a fair competition will be a bad decision.

Yes we have moved from developing 3rd world nation to almost developed world "status" !! The second para of yours is subjective though. I owned my first car in 1987, but my family owned cars in 1930's - hence luxury is subjective. All other points are relevant.

Though about the Japs bit..well let's see ! Maruti / Suzuki swallowed the market since inception. The Maruti 800 was a status symbol - no less in the early 80's - SO the Japs have had a good run for twenty years and are still ruling the roost. I really do think the other "niche" players ought to get real on pricing & see how it goes.

Originally Posted by naj

Hi!

The Import duties were kept high so as to discourage auto imports to safe guard auto manufacturers, both national and multinational.I am surprised about this U turn in the govt policy. I feel that cbu imports may not be cheaper as the same variant is also made in India in some cases. This policy change could be for imports of auto components like engines ,ECU, etc which many multinational car companies are importing. May be the prices could come down this way.
But you see , the bottom line is profits and if the Indian buyer is buying a car at current price levels why will the cos lower the prices on account of reduced duties unless the government forces them to do so (read the excise benefits for sub 4m and 1.2 cc cars which have been passed on to the consumer)
I do hope that the import duty cuts are customer centric.

Cheers,
Naj

I certainly hope so too - and they better be, or else why would one buy a EU car vs any other (though their build quality would sway many - including me )

Originally Posted by manson

Forgetting the set of four wheels for a moment, I can't stop to think of a 1198 priced below its Japanese cousins.
Listening to the mind though, this move will have a cascading effect and definitely affect the domestic players all the way down to the C segment. It may just have a positive effect for exporters though, garments, handicrafts, ayurvedic medicines, etc have been booming in the European markets for a while now. Lets see what gives.

manson.

Ok I "think" I see your point




Cheers

[raul]

The question is will any car manufacturer 'leave money on the table'. The luxury car market currently in India with wide income disparity is not exactly elastic, its probably the same folks who are shelling out 60-100 lakhs who will buy the same cars at the lower costs so a price reduction will not increase volumes, and unlikely to compel the manufacturers to sell lower.

The only way it could happen is if the government compels them via an act or rule to pass on the tax benefits and follows through with enforcement. Given this is a super luxury segment I don't see the babu's being remotely concerned.

The policy of encouraging production here will continue, and its not a bad policy given we could do with all the employment we can get, but it has affected local car manufacturers competitiveness in global markets, since rather than innovating which is the purpose of the policy they have been happy to offload third grade products and technology here till 1990, forget venturing out to competitive markets with homegrown technology. Its only after that that Tata and Mahindra are trying but there is still a long way before they become legitimate desirable global brands.

Given our purchasing power, lower cost of labour and business here and costs of the same cars abroad we are overpaying by quite a bit most if not all of the time. That needs correction via policy but given that this is considered luxury again not a priority for the babus.

[v10]

Guys, read the very first line. Its just a 'proposal' in this years FTA by the EU. There is no way that will be signed. They say this every year but its way too early in the indian automotive industry to open free trade.

In short, not happening.

[lurker]

Actually it is very much happening.

because as per WTO doha, to which India is a signatory, all countries have to tone down their import duty structure to reasonable levels and at what is prevailing world-wide if they want to enjoy increased market share for their exports. In short, you can export only if you lower import tariffs and set a level-playing field.

For instance Saudi Arabia charges no import duty on any product, GCC countries charges a nominal 10% and US/Canada 15-30% and India exports freely to all these countries yet when it comes to imports it charges 110% thus tilting and overturning the playing field. Yeh kaise chalega bhai.

Until now the excuse was that least-developed countries and underdeveloped countries needed preferential treatment and escalated duty to establish domestic industries. But that excuse is running thin with each passing year. And India was obligated to bring their import duty structure to reasonable levels at a certain cut-off year viz 2012.

http://www.business-standard.com/ind...ess%5C/425766/

[//M]

IMO its not exactly wishful thinking to see a BMW 7-Series at 50-55 lakhs. When the world pays 50 lakhs for a certain product, why we Indians should pay 85 lakhs? I really hope the taxes go south wards as we can see some terrific German and British cars within budget of many. Imagine a Porsche Cayman at 30 lakhs and a BMW 3 series at 18-20 lakhs. What more we can expect a fairly used BMW 3 Series for under 10 lakhs !!