The prices of vehicles have evidently increased after the announcement of the budget 2012-13. According to a sales representative of the Volkswagen in Mumbai the prices have definitely gone up. He said “Earlier this week we increased the price by Rs 80,000 and now after this announcement I think it will go up by another Rs 80,000.”
Taxes on vehicles have increased to 12 per cent from 10 per cent. As per the changes, cars having an engine displacement of lower than 1,500 cc will have the excise duty increase by 2 per cent. Most of the popular small cars in the country such as Swift, Punto, Brio, Alto, Polo, Wagon R, Fabia and Figo fall under this category.
Excise duties on cars above 1,500 cc have increased by a higher margin than the duties on small car. Sports Utility Vehicles (SUVs) like Xylo, Safari, Bolero, Innova and Scorpio and cars like Skoda Fabia and Volkswagen Polo 1.6, will see the tax hike. Earlier, the excise duty on these cars was 22 per cent plus Rs. 15,000. However, the government has now made the excise duty single ad valorem of 27 per cent. Previously, when the tax was fixed at 22 per cent, a car costing Rs. 800,000 would be taxed Rs. 176,000 plus the additional Rs. 15,000. The total tax would then be Rs. 191,000 and the total price would ultimately be Rs. 991,000. However, after the implementation of the revised duty of 27 per cent, the cars will cost much more.
One car that escapes the 27 per cent excise duty and still competes with all SUVs mentioned is the Maruti Suzuki Ertiga. This seven-seater Multi Utility Vehicle (MUV) will hit the Indian roads next month. The engine displacement of the Ertiga is lesser than 1,500 cc, hence, it will have lower excise duty. Only 12 per cent of excise duty will apply to Ertiga, however, its competitors will have to pay 27 per cent.
Deepesh Rathore, Managing Director, IHS Automotive, says “Well it will compete with Xylo, Innova and even the Tata Safari and the M&M Scorpio. The Ertiga is well placed there.”
The excise duty on Completely Built Units (CBUs) has also been revised. These were previously taxed at 60 per cent; however, the taxes have now been increased to 70 per cent. As per the Volkswagen sales representative, the Beetle will become even more expensive. Other luxury vehicles also such as Mercedes, Audi and BMW 5 and 7 are likely get more costly.
