Union Budget 2013: Simply Unaffordable Vehicles?

NEW DELHI: Prepare to shell out anywhere between Rs 15,000 and Rs 60 lakh more for SUVs and imported luxury vehicles, including superbikes above 800cc, as the finance minister slapped heavier duty on them to tax the rich and affluent. Some sedans may also see prices go up. These include the Honda Civic and petrol versions of Toyota Altis, Maruti SX4 and Renault Fluence.
The hike will come in as early as Friday and will cover popular SUV models like Mahindra’s Scorpio and XUV500, Toyota’s Fortuner and Innova, Tata’s Safari, luxury ones like Audi’s Q3 and Q7, BMW X1, apart from imported ones like Land Cruiser and Prado and Lamborghini sports cars. Power bikes from Ducati, Suzuki and Honda will also be dearer with the FM increasing import duty on them from 60% to 75%.
Hiking the excise duty on SUVs and utility vehicles (UVs) from 27% to 30% (except for those sold as taxis), Chidambaram justified the move on the higher congestion they create. “SUVs occupy greater road and parking space and ought to bear a higher tax,” Chidambaram said. The government’s move was, however, not lauded by the auto industry which fears that a fresh wave of price hikes will further dampen demand. The FM also decided to tax imported cars higher, increasing duty on fully built cars from 75% to 100%. Those hit include Lamborghini and Porsche.
Companies said the duty hikes will be passed on to consumers as they are not in a position to absorb the additional cost. “We are not happy with the move and this will have an impact on our operations as well as profitability,” Sandeep Singh, Deputy MD at Toyota Kirloskar Motor, said.
“Singling out SUVs destroys the level playing field. Sad, one has to find to fight harder to succeed in one’s own country,” Mahindra & Mahindra chairman Anand Mahindra said. The government defined an SUV/utility vehicle as a vehicle that has an engine capacity exceeding 1500 cc; is over 4000 mm in length and has a ground clearance of 170 mm and above. “If a vehicle meets all the three criteria, it will face a higher excise duty,” said Vivek Mishra, executive director at PwC India.
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