2012 Budget impact on car prices

The 2012-13 Union Budget has been a big dampener of sorts for the Indian auto industry and potential car buyers alike. The increase in excise duty on small cars to 12 percent and on large cars to 24 percent has put a dent on car buyers’ dreams. Customs duty on imported vehicles, too, has gone up by a staggering 15 percent, and is now pegged at 75 percent! Fortunately, there are no additional taxes on diesel cars, at least for the time being. 

Let’s take a deeper understanding of the changes proposed in the Budget. First, the government has raised the excise duty on small cars by 2 percent to bring it to 12 percent. The exact definition of small cars is vehicles that are not more than 4m long and engine capacity under 1,200cc for petrol motors and 1,500cc among diesels. 

Finance Minister Pranab Mukherjee also announced an excise duty hike of 2 percent pushing the rate to 24 percent and a fixed duty of Rs.15,000 on cars which exceed a length of 4m and engine displacement above 1.4-litre (but less than 1.5-litre). Cars with engine capacities above 1.5-litre have been slapped with an additional 3 percent ad valorem over the 24 percent hike to take the total to 27 percent. As for imported cars, the customs duty has been raised from 60 percent to 75 percent for vehicles worth $40,000 (Rs 20 lakh) or more. 

For a new car buyer, the current excise duty hike means shelling out additional money as most auto-makers have like Honda, Hyundai, Tata Motors, Toyota, Skoda, Mercedes and Audi decided to pass on the burden to the customers. Those that haven’t will most likely do so in the days to come. 

Tata Motors was among the first to announce a price hike of its passenger cars by Rs 2,000 to Rs 8,000. However, the Sumo, Safari and Aria SUVs will set you back even more with price increases from Rs 8,000 to Rs 35,000. The other Indian car maker Mahindra & Mahindra will be raising prices of all its vehicles ranging from Rs 6,000 to Rs. 30,000. 

The prices of Tata passenger vehicles post the Union Budget 2012-13 are mentioned in the table below. All prices are indicative, ex-showroom, New Delhi.  

Honda, meanwhile, has announced a hike in prices for the base Brio E MT model by Rs. 4,000 while the top-of-the-line Brio V MT will now make you poorer by Rs 10,000. The Honda Jazz premium compact hatchback will now cost Rs 15,000 more. The price hike for the Honda City will range from Rs 5,000 to Rs 10,500. The price hike for the Honda Civic will range from Rs 36,600 to Rs 45,800, while the Accord will range between Rs 65,500 to Rs 93,975. HSCI has not mentioned the price hike of the CR-V, which is a Completely Built Unit, as of now.

The prices of Honda vehicles post the Union Budget 2012-13 are mentioned in the table below. All prices are indicative, ex-showroom, New Delhi. 

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Toyota has also announced an increase in prices of all their cars. The prices of the Etios Liva petrol has gone up by Rs 9,500 and the Etios Liva diesel by Rs 11,500. The Etios sedan will become more expensive by Rs 11,500 for the petrol variants while the diesel Etios will bear a hike of Rs 13,600. Even the recently facelifted Toyota Innova’s price has been increased by Rs 35,200. The petrol Corolla Altis will bear a price hike of Rs. 39,000 while the diesel Corolla Altis will become more expensive by Rs 26,500. But the steepest price hike has been of the Toyota Fortuner, which will now cost a whopping Rs 80,000 extra. 

“A rise in excise & import duty and input costs will not be very conducive for the auto industry as the additional burden of increased duty will directly affect the buyers and hence would lead to slowdown in sales. CBU prices will also be affected on account of a rise in customs duty. We have no choice but to pass on the price increase to the consumers,” said Sandeep Singh, Deputy MD, Sales and Marketing, Toyota Kirloskar Motor.

The prices of Toyota vehicles post the Union Budget 2012-13 are mentioned in the table below. All prices are indicative, ex-showroom, New Delhi. 

Skoda Auto India has declared a price hike between 2.2 percent and 5.1 percent across its model line up. Prices of the base model Skoda Fabia Classic will now start from Rs 4.60 lakh, the Skoda Rapid from Rs. 6.90 lakh and the Skoda Laura from Rs. 12.90 lakh onwards. The Skoda Yeti soft-roader will now be available from Rs 13.90 lakh onwards while Skoda’s flagship model, the Superb, will start at Rs 19.60 lakh onwards. All prices are ex-showroom New Delhi indicative. 

Hyundai too has hiked the prices of its models. The prices of its vehicles post the Union Budget 2012-13 are mentioned in the table below. All prices are indicative ex-showroom New Delhi. 

The country’s largest passenger car maker, Maruti Suzuki India Limited has announced an average price hike of 1.75 percent across the model range after the hike in excise duty on cars in the 2012-13 Union Budget. The bestselling Maruti Suzuki Alto will now become dearer by Rs. 4,200 to Rs. 5,900. Prices of the Alto K10 have gone up between Rs. 5,500 to Rs. 5,700. Prices of Maruti’s popular hatchback, the Swift, have been pushed up by Rs. 7,700 to Rs. 11,900. The recently launched sub-4m Swift DZire compact sedan has become dearer by Rs. 8,500 to Rs. 12,700. While the SX4 mid-size sedan will now cost between Rs. 9,400 to Rs. 17,000 more. 

The prices of Maruti Suzuki vehicles post the Union Budget 2012-13 are mentioned in the table below. All prices are indicative, ex-showroom, New Delhi. 

When it comes to luxury cars, the excise duty hike has considerably bumped up prices, taking the snob value of luxury car brands a notch higher. 

Mercedes-Benz India will be raising prices of their products by as much as Rs. 3 lakh. "The Budget is very disappointing for us. We were hoping for some reduction in taxes for large vehicles instead of hiking it further. We are going to pass on the additional burden to customers. We have not decided the exact amount yet, but on an average it will vary between Rs 2 lakh and Rs 3 lakh," said, Suhas Kadlaskar, Mercedes-Benz India Director (Corporate Affairs and HR).  

Audi India, too, has decided to pass on the additional excise duty to customers with a hike of up to14 percent on CBUs and a hike of 3.4 – 3.7 percent for locally produced models. The Audi A4 is now available from Rs. 30.60 lakh onwards while the price of the Audi RS5 has been pegged at Rs. 85.95 lakh (Ex-showroom New Delhi). 

Volvo India has raised prices of all its cars by less than 3 percent. The minimum increase in price is Rs. 1 lakh while the maximum is Rs. 1.30 lakh. The Volvo S60 D3 Kinetic earlier worth Rs. 24,21,000 is now priced at Rs. 25 lakh, the D3 Summum earlier priced at Rs. 27 lakh is now worth Rs. 28 lakh and the D5 Summum is available for Rs. 31 lakh. Volvo’s T6 firecracker of a car in Summum trim has also become dearer and has been pegged at Rs. 35 lakh. Volvo’s rather excellent S80 flagship sedan available in three variants after the hike in excise duty are priced as follows, D3 Kinetic Rs. 33.24 lakh, D3 Summum Rs. 36.24 lakh and the D5 Summum for Rs. 39.24 lakh. Volvo’s baby SUV, the XC60 is now priced between Rs. 35.25 lakh to Rs. 41.25 lakh. The successful XC90 SUV from Volvo is now available for Rs. 42.80 lakh. 

The prices of Volvo vehicles post the Union Budget 2012-13 are mentioned in the table below. All prices are indicative ex-showroom New Delhi. 

While the hike in excise duty for cars across the board has naturally had negative feedback from car makers, they did heave a sigh of relief as the Finance Minister did not announce any specific hike in taxes for diesel cars. Maruti Suzuki and Hyundai had put their plans of setting up diesel engine plants on hold due to uncertainty over taxation policy on diesel cars.

All in all the hike in excise duty on cars according to the 2012-13 Union Budget has raised car prices in the sub Rs. 5 lakh price bracket between Rs. 4,000 to Rs. 8000 for hatchbacks depending on the trim level of the variant. Premium hatchbacks feel the pinch a bit more as prices have gone up between Rs. 7,000 to as much as Rs. 15,000. 

Prices of mid-size sedans like the Honda City and Maruti Suzuki SX4 have shot up from as little as Rs. 5,000 to Rs. 17,000 while prices of premium sedans like the Honda Civic and Toyota Corolla Altis have gone up roughly between Rs. 36,000 to Rs. 46,000. 

MUVs/SUVs under the Rs. 20 lakh price bracket will experience a price hike roughly between Rs. 8,000 to Rs. 35,000 plus. Above the Rs. 20 lakh price bracket the pinch will be felt severely, for example the Toyota Fortuner, is now dearer by a whopping Rs. 80,000.

Entry level luxury sedans like the Honda Accord will now be dearer between Rs. 65,000 and Rs. 94,000. 

Luxury vehicles from the likes of Mercedes Benz, Audi, Volvo and others will now be dearer by anywhere between Rs. 1 lakh to Rs. 3 lakh.  

Post the announcement of the 2012-13 Union Budget, Hyundai has reportedly confirmed its intentions to set up a diesel engine manufacturing plant in India. The Korean car maker is likely to manufacture 1.1-litre, 1.4-litre and 1.6-litre diesel engines in India. Hyundai will invest around Rs. 500 crore in setting up the diesel plant that will have a minimum capacity of 1.5 lakh units per year. 

Maruti Suzuki has announced that they will be setting up a diesel engine manufacturing plant with Rs. 1,700 crore investment, the plant will have an annual production capacity of 3 lakh units.