The excise duty rollback by the Narendra Modi government has forced car- and bike-makers to hike prices in the range of 1-5%. Analysts say that this move is definitely going to impact sales numbers in the month of January as many people booked their vehicles in the month of December 2014 to steer clear from this hike.
For small cars, the excise duty increase has been from 8% to 12%, 30% from earlier 24% for the SUVs, 24% and 27% from the earlier 20% and 24% for mid-sized cars and large cars, respectively.
Navin Matta of HDFC Securities in his January 5 report said that the month of December saw advancement of demand because of the lingering excise duty hike in the month of January.He said, "In view of the fragile nature of volume recovery across the auto sector, a hike in excise duty could adversely impact demand in the short term."
Hero MotoCorp, India's largest two-wheeler maker on Wednesday morning said, "he auto industry still remains sluggish, and therefore, the rollback of the current excise duty rate is going to adversely impact the industry in particular and the manufacturing sector in general."
Automakers are lamenting that the excise duty rollback will force them to pass on the price hike to t he customers which is going to further slowdown the pace of growth in the sector. Hero MotoCorp said, "We have raised the prices on our two-wheelers to offset the increased duty impact. The new prices have come into effect from January 1st."
India's largest carmaker, Maruti Suzuki Ltd has also increased car prices followed by other major carmakers like Hyundai,General Motors, Honda and Tata Motors.
The price increase for Hyundai cars has been in the range of Rs 15000-Rs 1,27,000. Nissan India, too, has increased prices by 1-3% on Wednesday.
Jinesh Gandhi of Motilal Oswal in his monthly auto update, wrote that retails for Maruti Suzuki for the month of December grew 18% year-on-year to 1,57,000 units, driven by pre-buy in fear of an excise duty increase.
Gandhi quoted Pravin Shah, Chief Executive, Automotive Division & International Operations (AFS), M&M as saying, "The industry which was showing early signs of recovery would be severely impacted by the withdrawal of the excise duty concessional rate which would affect overall business sentiment, as it will lead to an increase in vehicle prices.
Clearly, the rollback of excise duty is one of the reasons for the uptick in automobile sales for December and price hike as a result of this will have some short-term impact on demand.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}