While all the
arm twisting and lobbying tactics seem to have worked, albeit only temporarily, the Indian government seems to have hit back with a move that will make everything from luxury cars and high end motorcycles, assembled as CKDs more pricier. While the government gave in to the auto industry’s demands of the purported CKD definitional change and went back to the previous definition, the Government has pulled off a counter by hiking the previous CKD duty rate of 10% to 30%.
What this move will do is, it will further increase all car prices which are shipped into India as CKD(Completely Knocked Down) kits and then assembled in Indian assembly units of the global car makers. With this increase in CKD duty from 10% to 30%, all the cars that are assembled in India will get pricier except parts like engines arriving from other countries as CKD units, on which the old CKD duty rate of 10% will still apply.
The government seems to have excluded only engines and gearboxes from the CKD For instance, the 2011 Volkswagen Passat, which will see a March 29th launch is expected to be hit with the bump up of the CKD duty. So will India assembled Harley Davidsons, the Kawasaki Ninja 250R and the very latest casualties, the Hyosung 650R and the Hyosung ST7 motorcycles, which will now see a higher price tag due to them being assembled locally from CKD kits.
So, plenty of cars like the Audi A4, the BMW 3 Series and 5 Series Sedans, the Volkswagen Passat, the Volkswagen Jetta, the BMW X1, the Skoda Superb, the Honda Accord the Merccedes Benz C-Class and E-Class Sedans, the Toyota Fortuner and many other cars will now get pricier by close to INR 4 Lakhs each and that is a starting figure.
This could hit Japanese manufacturers like Toyota and Honda very hard indeed as the appreciating yen and the CKD rate hike could just be the double whammy that takes the bottom out of CKD cars that they sell currently in India. But, will this latest move of the Indian government do anything to encourage more manufacturing in India by forcing a few car manufacturers to kick start grounds up Indian manufacturing operations?
We’re still skeptical about as the auto makers can pass on the burden of the duty rate hike to consumers, who stand to lose the most out of this deal as it stands currently. On the other hand, if this move is any indication as to what we can expect in future budgets, where the Government could slowly hike up the CKD duty rates in a phased manner to levels of 60%, just like they are doing with the tobacco industry, then the auto makers may seriously have to contemplate setting up Indian manufacturing options. The latter might just be the case going by the Government’s stance in the near past. The stage seems to be set!
Source: Indiacarbikes.in
All i see here is consumer's loss....
Does anybody have any idea about probable price hike for entry level cars like Polo and Fabia? Though both of them are manufactured at VW Chakan plant in Pune, did the engine and gearbox are imported for these models also?
