Mercedes-Benz favours diesel price hike over excise duty hike

A high ranking official of the Indian subsidiary of Mercedes-Benz, the Germany based leading luxury automaker has expressed his concern over the impending hike in excise duty as the slump growth rate of the Indian auto market backed up with depreciating value of the Rupee has already added to the plight of the automakers in the country.

Mr. Peter Honegg, CEO and Managing Director, Mercedes-Benz India has affirmed that the company would prefer the after effects of the diesel price hike over the retrogressive after effects of the surge in excise duty. As per him, the automakers in India will be in a better position to handle the diesel price shoot up by Rs. 2 or Rs. 3 a litre but the hike in excise duty would further decline the growth rate as the demand for the petrol powered cars have drastically declined and it is the diesel run cars, which is witnessing rising demand.

Commenting on the deliberations over the hike in excise duty, Mr. Honegg said, "We are not very happy with the discussion on excise duty hike. The government's idea will not help at all as it will not bring more money into the pocket of the government. Instead it will only dampen the already slowing down buying sentiment. We would rather prefer a hike in diesel prices by Rs 2-3 per liter as it will result in more revenues for the government".

Currently, the diesel variants are imposed with an excise duty ranging from 12 % to 27% in accordance with the size of the vehicle and the engine capacity.