General Motors and SAIM propose hike in diesel prices rather than tax on diesel models
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Contradicting the proposal of imposing an additional tax of 5 per cent on the diesel cars, the American auto giant, General Motors along with the Society of Indian Automotive Manufacturers (SIAM) pitched a plan suggesting a hike of Rs. 1 per litre on diesel prices. According to GM, the latter will fetch more revenues against the implication of additional tax on diesel vehicles.
P Balendran, Vice-President, Corporate Communications, GM, said, “All original manufactures have recommended that right approach will be to increase diesel prices in small doses and reducing petrol rates gradually so that market distortion is addressed and the sector performs well. We as well as Society of Indian Automobile Manufacturers (SIAM) has recommended, a hike in diesel prices by Re 1 per litre as it would help government earn Rs 6,000 crore revenue.”
He further added, “The government’s revenue earnings from Rs 1 per litre hike shall be three times more as compared to Rs 2,500 crore incomes from the levy of 5 percent vehicle tax on diesel cars. The Planning Commission has conducted a study and the report has come out saying that privately owned passenger cars consume only 1.03 percent of the total diesel consumed in the country. Therefore, what we have recommended is that levy of additional diesel tax is regressive step for industry.”
The prices of petrol and diesel have vast disparity; as a result, the penchant for diesel cars in the Indian auto industry has gone up to 85 per cent, leaving petrol models at just 15 per cent. The proportion between the two was maintained at 50:50 earlier. The proposal of slight increase in the diesel prices and gradual decrease in the prices of petrol will not only balance the present scenario but will also fetch more revenues for the government.
The auto industry in India is anticipated to expand between 6 and 8 per cent by the end of this year, as believed by GM. With the growth of market, the company also foresees an upward movement at the same pace.
In June 2012, the auto maker registered sales of 7,364 units in India, wherein 5,286 units were accounted for GM’s well-liked model Beat, together with its 4,800 units of diesel models and 700 units of Tavera. Following the end of labour strike at the company’s plant, the American auto maker is aiming to roll out 2,000 units of Tavera by the end of July 2012. Tavera, one of the car maker’s bestsellers in the country, is rejoicing with a waiting period of up to three months.
With the end of strike, the production of Tavera at GM’s Halol manufacturing unit will be raised up to 2,500 units from the present 1,800. The manufacturing procedure of Tavera is followed using 100 per cent local components, which enable the car maker to maintain Tavera’s competitive pricing. At the same plant, the auto maker is planning to increase the production capacity from 85,000 units per year to 1.10 lac units from the next year.
In addition, the company has lined-up two new models for the Indian auto market, namely Sail (including hatchback and notchback) and a Multi Purpose Vehicle, Enjoy. It is believed that both the models will mark their presence in the company’s product portfolio in the last quarter of the current fiscal. With a handful of new plans and launches, the car maker is sure to carve a special niche for itself in the market.
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