The recently announced hike in excise duty has compelled the car manufacturers to increase their product prices in India. To offset the additional cess, the Indian automaker Mahindra & Mahindra has decided to mark up vehicle prices between Rs 5,500 to Rs 47,000. The new change in prices for the passenger vehicles would be effective from April 1 this year.
Commenting on the occasion Pravin Shah, Mahindra Chief Executive said to PTI, "Though the 1-4 per cent duty hikes are already effective, we have decided to pass on the price increases only from April 1. Prospective customers can still avail of our various passenger cars at the pre-Budget prices all through March. In absolute terms, prices will go up by Rs 5,500 to Rs 47,000, depending on the model and prevailing prices.”
However, the company has hiked the price for the recently launched KUV100 with immediate effect. The petrol model now gets costlier by 1 per cent, while the diesel model costs higher by about 2.5 per cent. Following the Budget proposal to increase duty to the tune of 1-4 per cent, all the automakers led by market leader Maruti have increased retail prices to pass on the duty increases.
The customer response to the KUV100 has been very good, thereby forcing the company to ramp up its production by additional 3,000 units. The decision to increase output is owing to the 8-10 weeks waiting period for the new car as the company already has about 27,000 pending orders. The company has a combined 9,000 capacity for XUV500 and KUV100 models at the Chakan plant and the proposed new capacity will only be for KUV100. When specifically asked about the petrol model of KUV100, he said it has been beyond their expectation as the demand is almost 50:50 for both the variants.
Shah further stated: "The new duty structure is too complicated and once a new duty is imposed it remains forever in our country. So is the case with cess. So for us, we are keenly awaiting the rollout of GST. However, I welcome the Budget for other things.”
The Budget has also imposed a complicated duty hike on auto companies with about 2.5 per cent cess on diesel vehicles of length not exceeding 4 metres and engine capacity not exceeding 1,500cc, and 4 per cent on higher engine capacity and SUVs and bigger sedans. Moreover, petrol/LPG/CNG driven vehicles of length not exceeding 4 metres and feature engine capacity that do not exceed 1,200cc attract a 1 per cent hike in duty.
