Post-Budget Price Hike for Cars in India

Budget 2016-2017 brought a lot of reforms in various sectors of manufacturing but unfortunately, cars are now more expensive in the Indian market than the last month. Those with enough stocks from the last few months can easily sell them for the pre-budget prices whereas manufacturer’s like Maruti Suzuki and Hyundai are full with bookings and can’t afford a loss of even a single day with the older prices.

The hike has made some cars significantly expensive whereas entry level cars also witness some value between 2,000-5,000. The new tax policy states an additional 1% charge on small petrol cars (below 4 meter and 1200 cc) whereas diesel cars below 4 meter and 1500 cc engine would witness additional 2.5% of tax.

They sound bearable up to some extent but cars which are longer than 4 meter or carry an engine bigger than the specified limit attracts 4% of tax into them. Most of the cars which do not follow the length and engine policy cost more than 10 lakhs and another luxury tax of 1% sums up to a total of 5% tax on these most practical segment of cars worldwide.

Maruti Suzuki has cars ranging from INR 2.54 lakh - 11.69 lakh and the change in tax values raised the prices between INR 1,441 to INR 34,494. They have lowered the profit margin as S-Cross would have witnessed nearly INR 55,000 of price hike due to bigger engine and longer dimensions.

Honda India has increased the prices by INR 4,000 - INR 79,000. The CR-V witnessed a big change in price as 5% additional charge makes a lot of money on an expensive car. Hyundai India has increased the prices by INR 2,889 to INR 82,906 whereas Mercedes Benz would increase the price tags by 3-5% as all of the cars from luxury German car makers would attract heavy taxes.

Cars like Hyundai Creta, Ford Ecosport , Maruti Ciaz and Honda City are the one’s who have seen a mixed implementation of taxes over there different variants. Hyundai i20 Elite, Baleno and Jazz are now priced in the segment of compact SUV’s whereas they now clash with C segment sedans.

Things are more confusing for a person who has a budget of nearly 10 lakh as base variant mostly stands in INR 9 lakh segment whereas top reaches around INR 12 lakh. The gap between both the variants will get an additional 12,000 difference for no reason. People will most probably buy a middle variant and add some accessories for some reasonable saving on their new car.

It’s good to pay tax as things around us are built with the same money but sometimes and in some specific fields like automotive sector, growth needed more reforms and cutting down some taxes on imports like CKD’s and CBU’s, along with no change in tax values on Indian built cars should be kept intact for a longer period.