Budget 2013 has proposed an increase in import duties of completely built cars and motorcycles, which will affect the prices of some cars from Audi, Mercedes Benz, BMW, Jaguar, Land Rover, and Volkswagen. While all cars from brands like Lamborghini, Rolls Royce, Porsche and Ferrari will be increased as the duty will go up from present 75% to proposed 100%.
Apart from this, budget 2013 also stated that import duty on completely built motorcycles above 800cc will be increased from 60% to 75%, this will affect prices of certain Harley Davidson motorcycles. Excise duty on all SUVs will be increased from 27% to 30%, because they need larger parking space, says Mr Chidambaram. Ford India, who is close on the heels of launching their compact SUV EcoSport, is the first to express their displeasure officially. They need to price the EcoSport competitively in order to make it a success in the Indian auto industry.
A statement revealed by Joginder Singh, president and managing director, Ford India, reads, “We welcome the focus on infrastructure development, social benefits for inclusive and sustainable growth in the country. The investment allowance to boost the manufacturing sector is a positive move. The automobile industry is a significant contributor to India’s economy and future growth potential. We are disappointed that there is very little in the budget that will help boost consumer confidence and revive growth. It is a missed opportunity to introduce measures that would have revived industrial growth significantly. As we all know the automotive industry has been going through very challenging times, we are disappointed with the increase in the excise duty for SUVs.”
At the same time, Audi India’s Head, Michael Perschke, said via his tweeter account, “Duty Increase impact auto industry growth! No choice but 2 pass on increase to customer.” Audi is the second largest luxury car maker in India. They too expressed their displeasure as you can read in the statement below.
“Increase in Custom Duty for imported cars and Excise Duty on SUVs is very surprising. It 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.
Currently, the industry is facing pressure from a number of factors like increasing fuel prices, high input costs, persistent inflation, high interest rates; the increase in excise and customs duty will be a dampener. The government should have looked at extending support to auto industry, which has been contributing, significantly to the GDP and could have formed a strategic pillar of industrial development.
We are happy to note that there is a renewed focus on infrastructure especially roads. The proposed regulatory authority on road construction will hopefully fuel better infrastructure and speed up developments.”