Indian auto makers feel hiked excise on SUVs to hamper overall growth

Tuesday 12 March 2013, 17:50 PM by

The domestic passenger car sales sunk to a 12 year low with a 26 per cent drop during the month of February '13. Most of the top auto makers like Maruti Suzuki, Hyundai Motor India, Tata Motors and Toyota Kirloskar Motors, amid others reported a decline in the sales recorded by them in the auto market. Weak economic factors like inflation, rising fuel prices and steep motor vehicle finance rates are adding to the worries of all passenger car makers in the country.

Indian auto makers feel hiked excise on SUVs to hamper overall growth | CarTrade.com
Indian auto makers feel hiked excise on SUVs to hamper overall growth

Maruti Suzuki India Limited (MSIL), the country's largest passenger car manufacturer, has reported a 9 per cent sales drop during February 2013 in the domestic market. Further, the slow sales and piling up of inventories led the company to stop vehicle manufacturing operations at one of its Gurgaon production units on March 9, 2013. Maruti Suzuki had stopped production of its flagship models Alto and WagonR, of which some 1500 to 1800 units are assembled every day.

Hyundai Motor India Limited (HMIL), the country's second largest passenger car maker, is expecting hard times for the domestic market in the near future. Expressing his views on the company's predictions for Indian automobile sector, Rakesh Srivastava, Vice President, Sales and Marketing, HMIL, has been quoted as saying, “The market was suppressed as there was drop in enquiries with lower rates of conversions to purchase. The increase in fuel prices negatively impacted the already low market sentiments. We expect the challenge to continue in the next quarter until there is a significant change in macro-economic conditions.”

Other prominent auto majors like Tata Motors, General Motors, Ford and Toyota Kirloskar Motors also reported 'not-so' impressive sales during February '13 in the Indian passenger car market. The companies have chided the 2013-14 Union Budget over hiking the excise duty rates levied on Sports Utility Vehicles (SUV), premium imported cars and bikes. As per them, SUV segment is the sole segment recording healthy sales in the country and the government's latest decision will definitely hamper its growth.

Commenting on the hike on excise duty on SUV models, P. Balendran, Vice President (VP), General Motors India, has been quoted as saying, “...the market continues to remain subdued. Now with excise duty also going up for certain categories of vehicles, the market is not expected to improve in the coming months also as the macro economic uncertainties still continue. The hike in excise duty for SUVs, which is impacting other models as well, has further dampened the growth prospects.”

The medium and heavy commercial vehicle segments have been hit with slackening sales in India as well. Industry leaders like Tata Motors, Ashok Leyland, Volvo and Eicher are witnessing slow demand for their commercial vehicles in the market. Speaking on the same, S. P. Singh of Indian Foundation of Transport Research and Training, said, “Truck owners continue to be sceptical about economic recovery in the near future and road freight market is under pressure from the oversupply of trucks.”

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