Pricey cars to become pricier

The government had earlier slapped an additional specific duty of up to Rs20,000 per car, over and above the regular excise duty of 24% on all large cars, in a bid to dampen growth of gas-guzzling vehicles. The government’s decision to increase the excise duty on vehicles with higher engine capacities has not gone well with car makers as they think this move will affect growth of the sector which has already been affected by rising input costs, inflation, costly finances and fuel prices hike.

General Motors vice-president, corporate affairs, B Balendran, said, "The industry is passing through a tough time and this hike will adversely affect sales. We have been asking for a lower duty structure on all kind of vehicles, but this policy of higher taxes against bigger cars will definitely hamper growth of the Indian automobile industry."

Customers will have to shell out higher prices due to the cascading impact, as 12.5% VAT, 2% CST, education cess and octroi on the ex-factory prices will be charged over the additional specific duty. A Rs20,000 increase on ex-showroom prices is expected on popular cars such as Honda Civic, Toyota Corolla, Mahindra Logan and Hyundai Elantra, which belong to the 1,500-1,999cc engine capacity range. Vehicles such as Mahindra Scorpio, Tata Safari, Honda Accord, Skoda Superb and Mercedes C Class, which are over 2,000 cc, will be costlier by up to Rs30,000. Imported high-end sedans like BMW 7Series, Mercedes SLK Class and the SUVs like Toyota Prado, Porsche Cayenne, Mitsubishi Montero and BMW X5 may also see a price jump by over Rs50,000.

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