The new year has pushed the automotive industry on the back foot with prices of cars and sports utility vehicles (SUVs) soaring by five-to-six per cent with the withdrawal of the excise duty concession in December 2014. As excise duty increased by at least four per cent from January 1, across vehicle segments, car prices have shot up by amounts between Rs 15,000 and Rs 1.3 lakh. Besides, other costs such as road tax and value-added tax have made the price increase much bigger. While Hyundai, General Motors, Toyota Kirloskar, Honda Cars and Tata Motors have already passed on the increase to customers, sports utility vehicle segment leaders Mahindra & Mahindra and Nissan are likely to increase prices this week. Market leader Maruti Suzuki on Tuesday increased prices of popular models. While the Alto’s price was raised by Rs 8,500-Rs 12,700, for the WagonR it was Rs 12,500-15,700, Swift Rs 15,850-25,150, Dzire Rs 17,500-26,650, Celerio Rs 13,600-17,200, Ertiga Rs 18,750-27750, Ciaz Rs 22,450-31,600 and the Omni Rs 7,850-9,950. “The price rise on Chevrolet vehicles built in India ranges from approximately Rs 15,000 to Rs 61,000 depending on the various models and variants with effect from January. The overall revision includes both the price increases on account of cost pressure and excise duty withdrawal by the government, which has been passed on to the consumer,” said P Balendran, vice-president, General Motors India. Excise duty on small cars has been revised to 12 per cent from eight per cent earlier, while that on SUVs has gone up from 24 per cent to 30 per cent. Similarly, the new duty on large cars is 27 per cent, up from 24 per cent earlier, while that on mid-sized cars is 24 per cent, against 20 per cent during the concession period. “We will pass on the increase in excise, and there would be a related price impact to the extent of the excise increase,” said a Tata Motors spokesperson. “We are calculating the quantum of rise to be passed on,” said a Nissan Indian spokesperson. Honda Cars India has said the prices of its top selling car City has been revised upwards by Rs 48,000 and that of Amaze by up to Rs 26,000. GM’s Tavera model witnessed the highest increase by the company - Rs 61,000 - while the lowest increase was for the Spark hatchback, at Rs 15,700. The prices of two- and three-wheelers, too, have been raised.
An increase of between Rs 2,000 and 7,000 has been effected on two-wheelers with duty going up to 12 per cent from eight per cent earlier. According to sources, Honda Motorcycle & Scooter India (HMSI) has increased prices by Rs 2,000-7,000 because of the duty hike and another Rs 150-500 increase for other cost pressures. HMSI is the second-largest producer of two-wheelers in the country. Market leader Hero MotoCorp and Pune-based Bajaj Auto are also likely to announce their quantum of increase this week. Customers, however, can still beat the price hike and buy vehicles at older prices. Several dealers across the country still have older stock of vehicles built in 2014, whose prices have not been changed.
"Only the new cars bought from January 1 onwards are charged with higher excise duty. The older ones still carry the old rates. We are yet to be intimated by Maruti about the new rates but we are expecting it to happen this week", said a Maruti Suzuki dealer from the south.
Fears of excise duty hike, tempting discounts and new launches had induced buyers to showrooms last month as sales closed with a growth of 2.3%. With the revision in duty automotive companies are expecting a further strain on demand.