Sedans, SUVs likely to become cheaper

Sedans and SUVs like Ford Fiesta, Maruti SX4, Hyundai Verna, Honda Accord, Scorpio and Innova may get cheaper with the heavy industry ministry recommending removal of the additional excise duty slapped on vehicles above 1500cc last year.

The additional duty Rs. 15,000 on vehicles above 1,500cc and Rs. 20,000 on vehicles above 2000cc was imposed by the government in June last year to control spiralling oil prices by discouraging fuel guzzlers to reduce demand. As crude prices have come down and government wants to revive demand in the auto industry the move to scrap excise assumes significance.

“We have recommended for the removal of these duties in a note to the finance ministry,” Surajit Mitra, additional secretary in the ministry of heavy industries. He said the step was initiated in order to boost sales of sedans and SUVs, which have been impacted by the slowdown plaguing the industry. “We have to see how best we can help them,” he added.

The additional duty had come as a bolt from the blue for the companies in 2008 with most of them crying foul over the step. If implemented, the move will benefit companies like Mahindra, Honda, Ford, Skoda and almost all luxury carmakers like BMW, Audi and Mercedes Benz, though the impact may be marginal for the latter. The final decision will be taken by the finance ministry.

Pawan Goenka, President of Mahindra’s Automotive Division, said the step would be beneficial for the sales of the company’s vehicles and other industry players. “The market is already in an upswing. And any such measure will add fuel to the fire,” Goenka, who is also the VP for industry body Siam, said. He said Mahindra vehicles, like the newly-launched Xylo mutli-utility, would benefit immensely if the decision was taken.

Michael Boneham, president of Ford India, said, “If the government does scrap the additional duty, it will be positive for sales.”

Source: Times of India