Car makers normally hike the prices of new models as the year begins. This time it was involuntary, following the various taxes levied in the Union Budget 2016.
The country's premier car maker, Maruti, announced in a press release that "Following the infrastructure cess on automobiles in the Union Budget 2016-17, prices of its models would go up in the range of Rs 1,441 to Rs 34,494 across its models." Maruti's portfolio includes entry-level car Alto 800 to premium crossover S-Cross which are priced between Rs 2.54 lakh and Rs 11.69 lakh (ex-showroom Delhi).
It goes without saying that all other automakers from Tata to Mercedes will do the same.
The Finance Minister proposed that petrol/LPG/CNG driven motor vehicles of length not exceeding 4 meter and engine capacity not exceeding 1200cc would attract a cess of 1 per cent. He proposed to levy a cess of 2.5 per cent on diesel driven motor vehicles of length not exceeding 4 meter and engine capacity not exceeding 1500cc. Engines with a higher engine capacity and SUVs and bigger sedans would, attract a higher cess of 4 per cent.
The FM, however, gave some relief to the environment friendly vehicles.
However, the cess was a bad surprise to automakers as they felt that they past couple of years have been challenging and signs of recovery were barely showing. The automakers were actually looking for reduction of excise duties so as to boost the industry. The various new cesses would result in price rise that would result in lower customer sentiment, impacting the car industry. The TDS on luxury vehicles with more than Rs 10 lakh would also dampen demand of luxury vehicles in the short term.
All those who plan to buy cars may possibly make a beeline for environment friendly vehicles that have been spared the cess.
The country's premier car maker, Maruti, announced in a press release that "Following the infrastructure cess on automobiles in the Union Budget 2016-17, prices of its models would go up in the range of Rs 1,441 to Rs 34,494 across its models." Maruti's portfolio includes entry-level car Alto 800 to premium crossover S-Cross which are priced between Rs 2.54 lakh and Rs 11.69 lakh (ex-showroom Delhi).
It goes without saying that all other automakers from Tata to Mercedes will do the same.
The Finance Minister proposed that petrol/LPG/CNG driven motor vehicles of length not exceeding 4 meter and engine capacity not exceeding 1200cc would attract a cess of 1 per cent. He proposed to levy a cess of 2.5 per cent on diesel driven motor vehicles of length not exceeding 4 meter and engine capacity not exceeding 1500cc. Engines with a higher engine capacity and SUVs and bigger sedans would, attract a higher cess of 4 per cent.
The FM, however, gave some relief to the environment friendly vehicles.
However, the cess was a bad surprise to automakers as they felt that they past couple of years have been challenging and signs of recovery were barely showing. The automakers were actually looking for reduction of excise duties so as to boost the industry. The various new cesses would result in price rise that would result in lower customer sentiment, impacting the car industry. The TDS on luxury vehicles with more than Rs 10 lakh would also dampen demand of luxury vehicles in the short term.
All those who plan to buy cars may possibly make a beeline for environment friendly vehicles that have been spared the cess.
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