Excise duty hikes to make all cars costly

Prices of cars are set to increase by a minimum of Rs 6000 for a car like the Maruti Suzuki Alto K10 to Rs 2 lakh for the Mercedes C-class as a result of budget proposals for a hike in excise duties.

With standard excise duties being hiked from 10 percent to 12 percent, there will be an increase in prices across all cars including small cars that have benefited from lower duties and made India a manufacturing hub for compacts. For car longer than four metres, and with an engine capacity of 1500 cc for diesel and 1200cc for petrol, the excise duty proposed is now 24 percent as against 22 percent earlier. For cars with engine capacities more than 2000cc, the excise duty levy that will apply is now 27 percent as against 22 percent and Rs 15,000.

The budget has also proposed that custom duties on large cars, MUVs and SUVs that are bought in as completely built units and whose value is over $40,000 will attract a duty of 75 percent as against 60 percent earlier. This will impact cars like the Maruti Kizashi as well as luxury car models such as BMW X5, X6, 7-Series, Mercedes SUVs, Volvo cars, Honda CR-V, Nissan X-trail and Toyota Camry.

Lowell Paddock, president and managing director, GM India said the excise duty increase from 10 to 12 percent is a disappointment. “Since the bulk of our sales are in the small car segment, we will have to analyse their pricing -- I don’t think we have a choice when it comes to passing the price increase to the customer.”