The excise duty hike in the Budget has had an immediate impact on the auto sector with major auto-makers, including Tata Motors, Maruti Suzuki, Hyundai, Honda and General Motors, announcing plans to hike prices of vehicles by up to Rs 41,000.
The excise duty hike in the Budget has had an immediate impact on the auto sector with major auto-makers, including Tata Motors, Maruti Suzuki, Hyundai, Honda and General Motors, announcing plans to hike prices of vehicles by up to Rs 41,000.
Two-wheeler makers like Hero Honda and TVS Motors also followed suit by announcing rise in prices of their models. The country's largest auto-maker Tata Motors said it will increase prices of its vehicles following the increase in excise duty to 10 per cent, its managing director for domestic operations PM Telang told reporters on the sidelines of its Q3 results announcement.
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"Following the excise duty hike in the Budget, we may hike prices by up to Rs 60,000-70,000 for heavy vehicles and Rs 5,000-6,000 for smaller vehicles," Telang said, adding "any fiscal duty changes by the government, we pass on to consumers."
Car leader Maruti Suzuki also hike the prices of its models between Rs 3,000 and Rs 13,000 (ex-showroom, Delhi) from midnight tonight. Hyundai Motor India also said it will increase prices between Rs 6,500 and Rs 25,000. Honda Siel Car said it will also hike prices by Rs 13,000 to Rs 41,000 from tomorrow. General Motors said prices of its models will go up by Rs 6,200-22,000.
In the two-wheeler segment, the largest player Hero Honda said it will hike prices by Rs 500-1,500 across all models. The Chennai-based TVS Motors said prices of its models will go up between Rs 350-1,200.
Maruti chairman RC 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 up in the Budget will help create demand.
Volvo India managing director Paul de Voijs said, "the 2 per cent increase in the excise duty on cars will lead to a price hike. Unfortunately this will be passed on to the end consumer as it is inevitable."
"We will have to pass on the excise duty hike to our customers and our dealers. The price hike will come into effect as soon as the new excise rate is implemented," TVS Motors marketing president HS Goindi said.
The Budget hiked excise duty on all non-petroleum sectors to 10 per cent from 8, besides jacking up the duty on big cars and SUVs and MUVs to 22 per cent up from 20 earlier.
Other vehicle manufacturers, including General Motors, M&M are also considering similar steps. "Regarding the excise duty hike, we will evaluate the impact and revise the price of our vehicles in line with the increase," GM India president and MD Karl Slym said.
Ford India president and MD Michael Boneham said the excise hike is a major disappointment for the industry as there is a 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 in motoring ownership," he said.
Bajaj Auto managing director Rajiv Bajaj, however, said his company is not much bothered about the hike but said it will have to be eventually passed on to consumers.
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