New Delhi: Car makers, including Maruti Suzuki, Hyundai and Honda, on Friday said they will hike prices by up to Rs41,000 following an increase in excise duty to 10% in the Budget.
Maruti Suzuki India (MSI) said its models will cost between Rs3,000 and Rs13,000 more (ex-showroom, Delhi) from Friday midnight. Hyundai Motor India also said it will increase prices between Rs6,500 and Rs25,000.
Honda Siel Car too said it hike prices by Rs13,000 to Rs41,000 from Saturday.
MSI chairman R C Bhargava said the hike in prices is essential to offset the increase in central excise duty but the auto industry could sustain growth as other measures taken in the Budget will help create demand.
Volvo Auto India managing director Paul de Voijs said: “The 2% increase in the excise duty on cars will lead to a hike of the car prices. Unfortunately this will be passed on to the end consumer as it is inevitable.”
Finance minister Pranab Mukherjee, while presenting the Budget said the excise duty on all non-petroleum sectors will be increased to 10% from 8%, while big cars, sports-utility vehicles and multi-utility vehicles will attract 22% excise, up from 20% earlier.
Other vehicle manufacturers, including General Motors, Mahindra & Mahindra (M&M) are also considering a similar hikes.
“Regarding the excise duty hike, we will evaluate the impact and revise the price of our vehicles in line with the increase,” General Motors India president and managing director Karl Slym said.
Ford India president & managing director Michael Boneham said the hike in excise duty is a major disappointment for the automobile industry as there was strong need to continue the stimulus to support the ongoing fragile recovery.
“This is sure to affect consumer sentiments when taken with the simultaneous hike in fuel prices as it will lead to an overall slowdown of the increase in motoring ownership,” he said.
Bajaj Auto managing director Rajiv Bajaj, however, said his company is not much bothered about the increase in excise rate but said it will have to be eventually passed on to the consumers.
M&M president (Automotive) Pawan Goenka expressed disappointment that gap between large and small cars has not been reduced.
He, however, said emphasis on cleaner energy will have positive impact on auto sales and will eventually force industry to invest more on cleaner energy.
Goenka termed reduction of duty on e-vehicles as “a positive sign”.
Society of Manufacturers of Electric Vehicles, director Sohinder Gill welcomed the reduction in CVD on import of critical components and an imposition of nominal excise duty in order to avail the MODVAT benefit saying it is a positive step in promoting electric vehicle mobility in India.
“This will help in getting back the confidence of the serious and genuine domestic electric vehicle manufacturers, who were fighting a losing battle against the trading of cheap Chinese EVs in India,” he said.