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GST Impact – Maruti Ciaz, Ertiga diesel variant price to increase by INR 1.5 lakh

Maruti Suzuki India discontinued the regular diesel variants of their popular sedan Ciaz and UV Ertiga. Instead, Maruti now sells diesel variants of these two cars equipped with SHVS tech. Though SHVS is not a full hybrid system, it is still considered a hybrid vehicle.

Thanks to this, Maruti Ertiga and Ciaz enjoyed FAME benefits in the past as well as were exempted from the Delhi odd-even rule. This resulted in a huge sales boom. But now, it is this same SHVS tech which might result in the decline of diesel variant sales of Ciaz and Ertiga.

Goods and Service Tax or GST, set to be implemented across India from the 1st July 2017 will have a significant effect on the prices of hybrid vehicles. Under these new norms, all hybrid cars will now attract a 43% tax which has more than tripled as compared to the earlier tax norm.

This means, prices of Maruti Suzuki Ciaz and Ertiga diesel variants are set to increase by up to INR 1.5 lakh from 1st July 2017. In addition to the higher GST tax, the Government has also withdrawn the FAME subsidy, leaving vehicles in this category open to a price increase. This move will also affect prices of the Toyota Prius, Camry, BMW i8 and Honda Accord.

Both Maruti Suzuki Ciaz and Ertiga have been best selling cars in their segment with the Ertiga being a top 10 passenger car as on date while Ciaz mid sized sedan sees sales to the extent of 5,000 units per month. Premium features, state of the art infotainment and a host of on board safety features are the main attractions. Both these vehicles are offered in petrol and diesel engine options. The diesel engine is mated to Suzuki’s SHVS mild hybrid system and will be affected by the new GST tax rates while prices of petrol variants of both models will remain unaffected.

This new GST norm might just push Maruti Suzuki to discontinue the SHVS tech, and re-launch the diesel variants minus the SHVS tech.

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