[Ricky_63]

Mod Note : Please continue the discussion in the new, updated thread

Hi

Today's HT reports that the imports from EU countries shall henceforth cost a lot less, due to some new agreement being signed (April 2011) with the EU countries. Examples quoted are BMW, Jaguar, Volvo basically all CBU's 7 series currently at 85 lacs going down to 50 lacs, the XC60 going from 40 odd to 25 !!! So we shall have a hugely competitive market, where the Japs & the Koreans will be at a severe disadvantage.

Imagine a situation where the XC60 sells for almost the same as the Santa Fe or a tad over the Fortuner !! I can't stop smiling. Just hope this actually happens, so that the European build quality is experienced by many more of us.

This may also make the Japs & Koreans revisit their pricing policies !!



Cheerio

[AshOnTheRocks]

Very True @ Ricky 63:The European beuties will be more in reach of Indians now! Time to rejoice!! Not so much for Japanese and Korean auto manufacturers in India!

The HT news says "The proposed India-EU free trade agreement — likely to be signed by April — seeking the removal of import duties on automotive products, will see a drastic reduction in prices of imported luxury cars by as much as 38%. For instance, a BMW 7 series car made in Germany that presently costs Rs 84 lakh will become cheaper by over Rs 30 lakh.
New cars and SUV imports at present attract 60% duties that turns out to be more than 100% finally with the addition of various other levies like countervailing duty to neutralise the effects of subsidies and VAT which, for the buyer is a tax on purchase
Thus, the price of a completely imported car from Europe is more than doubled by the time it finds a customer in India.
Prices of cars of which components are imported and assembled here will also go down, as the 10% import duty on components will be scrapped. But the fall in prices will work out to 9% only.
But chances of import duties getting completely removed seem unlikely, as the domestic industry is already claiming the pact will have a disruptive effect on the market.
What's more, the two prominent players in Indian market — Japan and South Korea — do not enjoy any duty relief, as cars feature in the negative list in the bilateral trade pacts with them.
So, while a made in Sweden Volvo XC60 will see its price fall from Rs 40.5 lakh to Rs 25 lakh, its Japanese competitor Mitsubishi Montero will still cost Rs 39 lakh.
“A preferential treatment with the EU will be unfair to the industry at large,” an executive of a leading Japanese automaker said.
“The government should encourage domestic production, and not incentivise imports."
Also, an internal report of the European Commission revealed that the free trade pact would be detrimental to India's car industry, as 4% of India's automobile production — worth $1.3 billion (Rs 6,000 crore) — would move out of the country and would be replaced by cars made in Europe.
It said the EU's share in the Indian market would go up from 26% to 82.5% by 2020, while the share of vehicles made in India in the EU market will rise only marginally to 1.3% during the period.
The increased market-share will jack up the value of European vehicle industry by $1.8 billion (Rs 8,100 crore) by 2020, while the benefit to the Indian industry will be $87 million (Rs 392 crore)."

[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.

[vasoo]

Again another dream after the FTA with Japan. Very soon auto parts and automobiles will be exempted from this benefit as it is done for the Japan case.

[DicKy]

C'mon guyz, don't give me false dreams.
Merc had the opportunity to price theirs properly as all the C,E and S are made here itself.
But drastically lowering the price(by 30 lacs for eg.) will affect their brand image and will move the market tupsy-curvy.
Just think of the 3-er and C class priced at their proper price of 15 lacs?

Also another thread on India-Japan FTA is there,so what ? We can expect a Toyota Mark X for 13 lacs?
Don't think the other companies would allow this without a fight.And our industry is not that much matured to allow free import without affecting the domestic industry.

[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.

[vasoo]

Car companies split over import duty - The Times of India

...Pawan Goenka, the president of industry body Society of Indian Automobile Manufacturers (Siam), opposing any move to cut duty on imported cars while several members, including foreign luxury car makers such as Audi, Mercedes and BMW, batting for lower tariffs.
...

The industry lobby has made a strong pitch to the commerce department against the lowering of duty (something sought by the EU), saying it could see a flight of manufacturing investments from India and will negatively affect the domestic players and hurt employment.
...

[nikapur]

hi guys...came across this in todays HT. I have my porsche coming in mid april and was wondering when something like this becomes operational....

The India-EU (European Union) free trade agreement which is expected to be signed by April has given auto lovers a big-big reason to smile. One of the big elements in this agreement is that it intend for import duties on auto products to be eliminated, which will directly bring down the price of luxury cars in India by an estimated 38%. Brands like Audi, Mercedes and BMW will be for sale at a comparatively lower amount.

Today, a large share of an imported car's price consists of various taxes and levies on the car, such as duties, VAT and other local taxes. Indeed, the combination of these taxes finally becomes an effective 110% on the European car's value. Now, with elimation of duties, these prices are set to fall. As an example, a BMW 7-series which sells at over 80 lacs today, may become cheaper by some 30 lacs.

The Free Trade agreement will also cover car components. Thus, even cars which are assembled in India may experience a fall in prices by an expected 10%.

The Indian auto industry however is resisting these changes. Pawan Goenka, president, Siam (Society of Indian Automobile Manufacturers), implied that the local manufacturers may suffer, when he had said: “We are not being protectionist. Every country should ensure that opening up of trade does not hurt its local industry”

The point put forth by Mr. Goenka was protested by all luxury car assembling players. Mr. Mitra, Director, Sales & Marketing, Mercedes-Benz India said, “It is a misconception that the Indian industry will suffer if duty is lowered. While we support the argument that duty should remain high where competitive volume products are there, there is no argument to support talk of maintaining higher duty for the luxury-end”
Other biggies too supported the point raised by Mitra that no local players have to survive in India as there are no competitive products available in the country in the luxury segment. They maintained that once the duty goes lower, it will attract world class technology products and will open up options for luxury vehicle buyers.

An interesting point to note here is that Japanese and Korean manufacturers do not enjoy duty exemptions, which is not expected to change. Japanese manufacturers hence have objected to these changes, stating that the Indian government should encourage domestic production, and not imports.
Be it as it may, the new developments in the luxury car segment, will make the cars more attractively priced and hopefully cause more options for the Indian car consumers. Thus, we feel it is indeed a commendable thing.

[jigbarai]

^^
Why so ?
I mean, if the import duty is reduced - one has a choice to import the car directly and officially (and not go through the dealer here). Right ?

[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.

[swiftnfurious]

Originally Posted by DicKy

C'mon guyz, don't give me false dreams.
Merc had the opportunity to price theirs properly as all the C,E and S are made here itself.
But drastically lowering the price(by 30 lacs for eg.) will affect their brand image and will move the market tupsy-curvy.
Just think of the 3-er and C class priced at their proper price of 15 lacs?

Also another thread on India-Japan FTA is there,so what ? We can expect a Toyota Mark X for 13 lacs?
Don't think the other companies would allow this without a fight.And our industry is not that much matured to allow free import without affecting the domestic industry.

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.

+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 ?

[low_bass_makker]

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



Mods Ji please move the thread to the correct section.

[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.

[nikapur]

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.

why penalise the customers? ...the manufactures should fend for themselves!!

[CARDEEP]

The answer to all domestic manufacturers lies in the one of the lines mentioned in HT:

"domestic industry is already claiming the pact will have a disruptive effect on the market"

Please note that as per the Customs & Excise Act, any product manufactured outside India that has a disruptive effect on domestic market will be charged duty at higher rates to make local goods competitive. I feel probably the impact will not be as adverse as perceived at the moment.

A second thought to the same also means that the cars manufactured in EU will continue to remain costly, directly benefiting the Japs & Koreans, who not only have the first entrants' advantage, but, also the advantage of lower currency rate (artificially lower). But, this actually means that the consumer will loose out eventually.

Only way out IMO is to promote these companies to set up manufacturing units in India & removal of small car clause that favours small car manufacturers (again the Japs & Koreans who specialise in making small cars). It is important to have bigger (but not lesser efficient cars) rather than street racing &/or adjusting families in smaller cars.

My only request to Indian Govt, all foreign manufacturers should be forced to enter into JV with Indian Company, which is similar to Chinese & South Korean policy. After all Renault Fluence is sold as Samsung in Korea & all know about the role of Chinese entrepreneurs in any Chinese Company established with a foreign company.