[xingamazon]

Originally Posted by asr245

......
If they decide to leave, it's there loss, not ours (as long as our economy grows at current pace or more).

Originally Posted by EssYouWe

Conducive for what?

If they leave, I am in favor of throwing VAG out completely. There are enough companies to fill the void.

Guys, I guess you are not understanding what they mean when they say exit.
It doesnt mean they will not sell cars in India. It means instead of using their current facility to assemble the CKD, they will import Complete Built Units(CBU) to India from neighboring countries. Meaning those only who will be on rolls are the marketing people and the manufaturing guys will be sent home.

See the legislation have made CKD operation costly to the extent to equal CBU levels. That being the case they will rather import than have a facility to assemble CKDs.

Note the India market is something they will not ignore I too agree, but how you get the cars here is the question. Hope this post explain it.

[greenhorn]

To be honest, I dont mind this. Choice is a good thing, but as a nation, wouldnt it be better if we got the technology to design and build state of the art cars rather than depend on stuff some other country makes? I'm not saying that we force swadeshi down everyone's throats, but I think that if mfrs are serious about getting their hands on some of the indian auto market pie, esp since BMW etc have tasted blood, they better put their money where their mouth is.

So many of us whine about the lack of ABS in india, but one of the reasons I've heard about its scarcity is that its the whole thing is imported. Wouldn't it be better if we had local production of it ? Even better if the technology was available to us?

Plus with the increasing number of manufacturers taking advantage of the CKD provision, I imagine the FM might want to cut down on the resulting trade deficit?

[a.sundaram]

Recent budget proposals include a dropping of duties on luxury cars which include the Audi. I believe that there would be close to a 30-40% drop in the tax component for these cars. This not only makes the Audis more affordable but will also encourage more cars to come into the market

[EssYouWe]

Originally Posted by xingamazon

Guys, I guess you are not understanding what they mean when they say exit.
It doesnt mean they will not sell cars in India. It means instead of using their current facility to assemble the CKD, they will import Complete Built Units(CBU) to India from neighboring countries. Meaning those only who will be on rolls are the marketing people and the manufaturing guys will be sent home.

See the legislation have made CKD operation costly to the extent to equal CBU levels. That being the case they will rather import than have a facility to assemble CKDs.

Note the India market is something they will not ignore I too agree, but how you get the cars here is the question. Hope this post explain it.

If they price their products too high, no one will purchase them. And this will create an untapped market for other manufacturers to exploit.
And they will come in. Because now there is a market, and no competition. By the time Audi manages to wrap up their ego, someone else will take the early mover's advantage.

Just thinking of the A4 coming in at 10-15 lacs, gives you a good idea as to how big the market is.

I would anyday plonk 14 lacs on an Audi over a Skoda or a Honda.

[diffsoft]

Originally Posted by a.sundaram

Recent budget proposals include a dropping of duties on luxury cars which include the Audi. I believe that there would be close to a 30-40% drop in the tax component for these cars. This not only makes the Audis more affordable but will also encourage more cars to come into the market

The current Finance Bill does not propose any reduction in duties on luxury cars. By this I mean any reduction in CBU import duty or change in excise duties. So can you clarify the above?

Cheers,

[a.sundaram]

Originally Posted by diffsoft

The current Finance Bill does not propose any reduction in duties on luxury cars. By this I mean any reduction in CBU import duty or change in excise duties. So can you clarify the above?

Cheers,

The FTA (Free Trade Agreement) which has been under discussion since 2007 may actually come to fruition pretty soon in April. The FTA actively campaigns for 30% reduction in import duties for CBUs and 10% for CKD. But, it is still speculative with a lot of resistance from SIAM.

Car companies split over import duty - The Times of India

Indo-EU FTA to cut import duty, local players disagree - CNBC-TV18 -

[xingamazon]

Originally Posted by EssYouWe

If they price their products too high, no one will purchase them. And this will create an untapped market for other manufacturers to exploit.
And they will come in. Because now there is a market, and no competition. By the time Audi manages to wrap up their ego, someone else will take the early mover's advantage.

Just thinking of the A4 coming in at 10-15 lacs, gives you a good idea as to how big the market is.

I would anyday plonk 14 lacs on an Audi over a Skoda or a Honda.

I totally agree with you, but like they say there is a tipping point, which every government needs to asses.

Like for example, Chinese government was making conducive environment for everyone to come into the country. Now they have passed the tipping point when the economy has grown to the extent that govt can take shots and all players will agree.

Imagine, Chinese govt being strict right from day one, not even half of this would have been achieved.

Likewise, I am telling India, though it has a good potential market, has not come to the tipping point where the govt can call its shots.
We are supposed to be conducive in the beginning and later high handed. The legislations though I agree are right, I am only concerned about the timing of it.

For example, if the same rule was put for the small cars, I am sure, overnight everyone will adopt to full assembly. But the c + segment is just picking up, you have to make the users conducive now.

There is no point making cars more costly when they have not touched the tipping point.

[Traveler]

Luxury carmakers to breathe easy as govt clarifies on CKD - CNBC-TV18 -

Government Clarifies on CKD Definition. Hopefully this will bring a sigh of relief.

[androdev]

so what does it all translate to? price increase is imminent?

[ajman28]

Prices are bound to increase, but the proposed duty hike has been reduced to 30% or so for CKD.

[fz_rider]

Yes , the prices of Audi's and BMW's will be going up by 2-3 lakhs atleast !
Duty on assembled cars up | Autocar India

[Rigid Rotor]

In the news today - the tax on CKDs have now been reduced to 30% from the proposed 60%.

That CNBC link to the clarification on the definition isn't very clear . It first says
"CKD will now include only kits with pre-assembled engine, gearbox.."
and then
"In cases where individual components are imported such as an engine or a gearbox, and where there is value addition or indigenization in manufacturing, there will only be a 10% duty and these will not be included in the CKD definition."
Which I suppose means that even if the engine or gearbox is imported and there is indigenous manufacturing of other parts / systems, then its back to 10%?

[Mindgrinder]

this is good, generate more jobs in Car sector, why should our money go to other countries, should go to our country men, this will force most companies to setup plant here. only thing is govt should solve power crisis asap if they impose such rules.

[Yeldo]

Originally Posted by fz_rider

Yes , the prices of Audi's and BMW's will be going up by 2-3 lakhs atleast !
Duty on assembled cars up | Autocar India

Towards the end of the AUTOCAR INDIA article, it is said "Mercedes however, who has been assembling engines in India from for years, are likely to escape falling under this definition for both the C Class and the E Class." Whoa, what is that? If MBIL could assemble engines, why cannot 'market leader' BMW or 'fastest growing' Audi do it?

And does it imply that the price advantage we enjoy on especially the 5 series is gone?

[MaserQ]

Originally Posted by Traveler

Luxury carmakers to breathe easy as govt clarifies on CKD - CNBC-TV18 -

Now SIAM (Society of Indian Auto Manufactures) has sent a letter to the FM asking for an 18 month grace period before implementation of new duty structure levied on CKD kits.

Industry wants relief from CKD duty | Autocar India

Makes sense if the government agrees to it. Clearly auto MNCs will look to localize engine and gearbox production in the meantime. Win-win situation in the long term for all concerned..government, auto industry and the customers.