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Vehicle prices set for a decline

BS Bureau

The Union Budget has brought good news for those waiting to buy cars, scooters and motorcycles. Excise duty on passenger cars, motorcycles and scooters (above 75cc) has been reduced by 8 per cent. One can expect a price drop of at least Rs 10,000 on small cars, and of around Rs 30,000 on mid-size cars, say analysts.

Besides, the government has discouraged the import of used cars (which can be imported after April 1, when quantitative restrictions on imports will be removed) by levying a hefty 105 per cent basic customs duty on them. The total duty on used cars will now be 180 per cent.

The budget has also paid heed to the concerns of commercial vehicle (CV) industry, where have sales dropped by 12.5 per cent. Buyers of CVs can now avail of an accelerated depreciation of 50 per cent on new vehicles for one year.

Passenger cars, which had witnessed a 6.27 per cent drop in sales, will now be subject to a total excise duty of 32 per cent, down from 40 per cent levied earlier.

Passenger cars were subject to a basic excise duty of 16 per cent and a special excise duty of 24 per cent. With the removal of the 24 per cent and 8 per cent special excise duty (SED) slabs, the SED on passenger cars has now been pegged at 16 per cent.

As a result of this rationalisation, two-wheelers above 75cc now do not face any SED. Earlier, two-wheelers above 75cc were subject to a basic excise duty of 16 per cent and a SED of 8 per cent.

Rahul Bajaj, managing director, Bajaj Auto Ltd, has already committed to passing on the entire benefit of the duty cut to the consumer.

However, this may not happen in cars. B V R Subbu, Director (marketing), Hyundai Motor India, said: "Since most car companies are not making profits, they might decide to retain a portion of the benefit." The concessional customs duty of 5 per cent on CNG kits and LPG retrofit kits has also been extended.

Source: Business Standard

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