New Delhi: A day after finance minister P. Chidambaram announced a 1% additional education cess while bringing down import duty on auto components, the auto industry reacted accordingly, passing on the impact to customers.
Auto majors such as Tata Motors, Ford India and Hyundai Motors India announced that they will increase prices, even as luxury car maker Skoda Auto said it will pass on the import duty cut by slashing up to Rs24,000 on its models.
A Tata Motors official said the company will hike price across its passengers vehicle models between Rs500 and Rs1,200. “We’ve decided to pass on the impact of the education cess to customers, ranging from Rs500 on an Indica to Rs1,200 on a Safari,” the official said.
General Motors also said effective Thursday, it will hike prices across all its models—from hatchback Chevrolet UVA to to luxury sedan Chevrolet Optra. “We have no option, but pass it on to the customers. The increase in prices will be between Rs600 and Rs1,500,” a senior company official said.
Korean car maker Hyundai said it would be hiking the prices, but added it was still working out the quantum. “Due to a 1% increase in education cess in the Union Budget, Hyundai cars would cost more to the end consumer,” Hyundai Motors India managing director H.S. Lheem said.
He said the company will absorb the additional costs till the time it clears all existing bookings and would increase the prices once it clears this backlog.
Market leader Maruti Udyog (MUL) was the first to announce its decision to hike prices from 15 March, while other manufacturers, including Ford, were also taking stock of the situation to review their product prices.
MUL had, on Wednesday, said it will hike prices of its cars from 15 March on account of an additional 1% education cess announced in the Budget.
The company, however, added that as a gesture to customers who might have deferred purchases owing to the Budget, it has decided not to hike the prices immediately.
Ford India also said it was reviewing the impact on prices in light of the Budget. “We will be considering an increase in the prices of the Fiesta and Ikon that have high local content. We would need to study the impact of customs duty reduction on the price of the Endeavour,” a Ford India official said.
Honda Siel Cars India senior general manager Jnaneswar Sen said the company will hike the price of its SUV Honda CRV by Rs10,000 from Thursday on account of the additional education cess.
“However, we are not touching the prices of our sedans City, Civic and Accord as the import duty cut on components more or less balances out the education cess burden,” he said.
Meanwhile, Skoda slashed prices across all models by up to Rs24,000 citing reduction in customs duty on imported car parts in the Budget. The company said reduction in the prices will be effective from Thursday.
“We have been reviewing the price implications with the recent Budget impact. A reduction up to Rs24,000 is expected across various models with effect from 1 March,” Skoda India managing director Karsten Bogun said in the statement.