Luxury cars, imported super bikes and sports utility vehicles (SUVs) will become costlier as the finance minister has proposed to increase the duty on such vehicles, even as the companies have signalled that they would pass on the duty hikes to customers, a move that may hit the strongest growing SUV volumes as also the sales of superbikes and premium cars.
Stating that “SUVs occupy greater road and parking space” P. Chidambaram has proposed to hike basic customs duty on luxury cars from 75 per cent to 100 per cent, import duty for motorcycles above 800cc will go up to 75 per cent from 60 per cent, while duty on sports utility vehicles to move from 27 per cent to 30 per cent, but exempting those used in the taxi segment.
“Hike in excise duty for non-taxi SUVs is marginally negative for Mahindra & Mahindra and Tata Motors,” said Dinesh Thakkar chairman & managing director, Angel Broking, said.
“Increase in custom duty for imported cars and excise duty on SUVs will severely impact the auto industry and its growth. We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer. Overall it will have an adverse impact on automobile industry which is already going through a slowdown and specifically affect demand including that of SUVs,” said Michael Perschke, head, Audi India, the fastest growing luxury car brand in India, whereas other car brands are struggling with falling volumes.
Echoing his views Suhas Kadlaskar, director (Corporate Affairs), Mercedes-Benz India said the 100 per cent basic duty on luxury cars will put a break on new models coming into India and with such high duty selling luxury cars will become more difficult in India.