[romeomidhun]

Source: http://bestsellingcarsblog.com/2015/...stepwgn-shine/

"The big news in Japan in April is the tax rate hike on kei cars to align them with the rest of the vehicles available in Japan. The current government hopes that this will result with the local carmakers putting more focus and development on standard automobiles that play a much bigger part in the global market than the kei cars that are tailored specifically towards the Japanese domestic market and regulations."

In similar lines, Toyota was asking Indian govt to remove the sub-4m tax soaps to allow the market to grow.

As Japanies companies will try to develop more global products (read - without any size restrictions) there, this may have a big effect in India as well. Remember, India is one of the major markets for Suzuki - a big Kei car player in Japan.

[Rahul Bhalgat]

Originally Posted by romeomidhun

Source: http://bestsellingcarsblog.com/2015/...stepwgn-shine/

"The big news in Japan in April is the tax rate hike on kei cars to align them with the rest of the vehicles available in Japan.

In similar lines, Toyota was asking Indian govt to remove the sub-4m tax soaps to allow the market to grow.

Dear romeomidhun,
Appreciate your information and the concern for the industry.

I have a thought to share: Our country does not have enough of road infrastructure, we have a huge foreign trade deficit (we import more value and export less value) and crude oil import is a major factor of that.

So, it is better IMO to have concession for shorter cars. In general, such cars are fuel efficient too.

Actually, the sub 4 m cars are less costly and hence they garner a great demand because of less taxes. So, the tax soaps are actually helping the auto industry.

If you remove tax soaps of sub-4m, the demand for bigger cars may slightly go up but in general the total demand for the cars will come down IMO.

[romeomidhun]

Originally Posted by Rahul Bhalgat

Our country does not have enough of road infrastructure, we have a huge foreign trade deficit (we import more value and export less value) and crude oil import is a major factor of that.

...

If you remove tax soaps of sub-4m, the demand for bigger cars may slightly go up but in general the total demand for the cars will come down IMO.

You contradict yourself! If there is not enough infrastructure and local crude available, it s better to bring the demand for cars down, right?

Even though that will hit the car makers a bit, their new "globally competitive" products can be exported to other markets to compensate this.

[Nitthari]

Originally Posted by romeomidhun

Source: http://bestsellingcarsblog.com/2015/...stepwgn-shine/

In similar lines, Toyota was asking Indian govt to remove the sub-4m tax soaps to allow the market to grow.

As Japanies companies will try to develop more global products (read - without any size restrictions) there, this may have a big effect in India as well. Remember, India is one of the major markets for Suzuki - a big Kei car player in Japan.

Interesting news. I am also not a very big fan of the sub 4m rule. If the purpose of the rule is to reduce demand or reduce congestion then it doesnt make sense as the sheer volumes of even hatchbacks can create congestion. The govt needs to play a little smarter. Relax the 4 m rule but with the condition that the car makers will "make in India" rather than take the easy route of importing.

[Rahul Bhalgat]

Originally Posted by romeomidhun

You contradict yourself! If there is not enough infrastructure and local crude available, it s better to bring the demand for cars down, right?

Even though that will hit the car makers a bit, their new "globally competitive" products can be exported to other markets to compensate this.

Yes...it was a contradiction.

How the removal of tax soaps on sub 4 m segment is connected to car exports? If the products are globally competitive, they can anyway be exported even with tax soaps on sub 4 m segment in India.

[romeomidhun]

Originally Posted by Rahul Bhalgat

How the removal of tax soaps on sub 4 m segment is connected to car exports? If the products are globally competitive, they can anyway be exported even with tax soaps on sub 4 m segment in India.

Let me explain. If no soap is given for sub-4m cars, manufacturers will give equal or more importance to cars that are:

i) Spacious (>4m length),
ii) Powerful (>1.2L Petrol and >1.5L Diesel Engines) and
iii) Stylish (the 4m limit poses a lot of restrictions for designers)

These "better-balanced" cars will have more takers in international markets than the sub-4m ones.

[GTO]

You are focussing on only one point, not the entire story. Japan may have increased the tax on Kei Cars, but they still have varying tax slabs depending on the engine size. Cars with small engines pay lesser tax than those with larger ones.

[romeomidhun]

Originally Posted by GTO

You are focussing on only one point, not the entire story. Japan may have increased the tax on Kei Cars, but they still have varying tax slabs depending on the engine size. Cars with small engines pay lesser tax than those with larger ones.

May be; but the intention of the Japanese govt is the fact that "the local carmakers putting more focus and development on standard automobiles that play a much bigger part in the global market".