Carmakers like Tata Motors, Hyundai, Honda Cars and Mercedes-Benz have already passed on the infrastructure cess to the consumers. Others are likely to follow suit, soon.
The government's decision in the Union Budget to impose an infrastructure cess of up to 4% on passenger vehicles has had an immediate effect on car prices. Many automobile companies have already taken the decision to hike the prices of vehicles.
Hyundai Motor India that was the first announce a hike in prices of its vehicles on Monday said that rise in the prices ranged from Rs 3,000 on entry-level small car Eon to Rs 80,000 on SUV SantaFe, which are priced between from Rs 3.20 lakh and Rs 30.79 lakh.
Honda Cars India on Friday said it has hiked the prices of its entire product portfolio by up to Rs 79,000 to offset the impact of infrastructure cess that was proposed in Union Budget 2016-17.
Honda has hiked the price of its entry-level car Brio in the range of Rs 4,000 to Rs 6,000, premium hatchback Jazz between Rs 5,000 and Rs 19,500 and mid-sized sedan City from Rs 24,600 to Rs 38,100.
It has also hiked prices of multi-utility vehicle Mobilio in the range of Rs 21,800 to Rs 37,700 and that of its premium SUV CR-V between Rs 66,500 and Rs 79,000, depending upon different variants.
Tata Motors on Tuesday announced a hike in the prices of its passenger vehicles by up to Rs 35,000 with immediate effect. This it said was to offset the impact of infrastructure cess proposed in the Budget 2016-17.
The increase in the passenger vehicles will be in a range of about Rs 2,000 to Rs 35,000, based on the exact cess amount for the specific category, a Tata Motors spokesperson said.
While Maruti Suzuki India hiked car prices by up to Rs 34,494 to offset impact of infrastructure cess.
Joining them, luxury carmaker Mercedes-Benz India, on Wednesday, said it will hike prices of its vehicles by up to Rs 5 lakh from March 15 in order to offset the impact of infrastructure cess and luxury tax proposed in the Union Budget 2016-17.
The price increase would be between 3% and 5% depending on the model, leading to a price hike between Rs 1 lakh and Rs 5 lakh.
In India, the German luxury carmaker sells models ranging from A Class to Maybach, priced between Rs 28 lakh and Rs 1.67 crore (ex-showroom price).
Hitting out at the Budget proposals, Mercedes-Benz India Managing Director & CEO, Roland Folger said, "Contrary to our expectation of some relief in terms of rationalisation of duties, the introduction of additional duties and taxes in this years Union Budget has adversely affected our pricing. "On top, the steady rise of input costs against the backdrop of a weakening Indian currency has further eroded our bottom-line."
The company is hence left with no option but to make some necessary price adjustments to its product range, in order to protect our investments to provide an unparalleled brand experience to customers, he added.
Mahindra & Mahindra (M&M) too on Friday announced an increase in prices of its passenger vehicles by Rs 5,500 to Rs 47,000, effective April 1, to offset excise duty hike in Budget 2016-17.
"In absolute terms, prices will go up by Rs 5,500 to Rs 47,000, depending on the model and prevailing prices," Mahindra Chief Executive for passenger car business, Praveen Shah had said.
M&M had earlier said that the 1% tax collection at source (TCS) on luxury cars priced above Rs 10 lakh announced by Finance Minister Arun Jaitley in Budget 2016 could impact ease of doing business.
In a filing to the Bombay Stock Exchange (BSE), the company said, "It would require some additional upfront payment from the customer. Coupled with increasing administrative hassles, it could impact ease of doing business."
On a possible price hike, the company said, "It is general practice to pass on statutory levy increases to customers, wherever it is an industry level increase. The company would also do so in due course of time, after SIAM's discussion."
The company further said the TCS would be applicable on XUV500 and some models of Scorpio.
While the XUV500 is priced at Rs 11.5 lakh to RS 17.23 lakh (ex-showroom Mumbai), the Scorpio is available at a price range of Rs 8.62 lakh to Rs 14.08 lakh (ex-showroom Mumbai).
The government has decided to impose 2.5% cess on diesel vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,500cc, while higher engine capacity and SUVs and bigger sedans were slapped with a cess of 4% on the value of the car.
These are over an above a cess of 1% on petrol/ LPG/CNG driven vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,200cc.
On the overall implications of the infrastructure cess of 1-4% on automobiles, M&M said, "The cess will impact the entire industry, it does not discriminate between petrol and diesel. Hence, (there is) no competitive disadvantage to the company per se."
While the petrol variant of its newly launched mini SUV KUV100 will attract a cess of 1%, M&M said its diesel variant and another SUV TUV300 will come under the slab of 2.5% cess slab. Bolero, Scorpio, XUV500 and Xylo will be charged at 4%.
"There might be some impact on volumes. However, it could be offset by factors such as increased rural demand and soft interest rates," M&M said.
In the Budget, Jaitley proposed 1% cess on petrol/LPG/CNG driven motor vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,200 cc and 2.5% on diesel-driven motor vehicles of length not exceeding 4 meter and engine capacity not exceeding 1500 cc.
Other higher engine capacity and SUVs and bigger sedans will, however, attract a cess of 4%, Jaitley added.
(With agency inputs)
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