Hyundai hikes car prices by up to Rs 83K

Hyundai Motor India Ltd., the second largest automobile manufacturer in India, has revised the price of its complete product range in the wake of the new tax slabs implemented in the Union Budget. The price hike starts at Rs 2,889 for the entry-level Eon and rises up to Rs 82,906 for the full-fledged Santa Fe SUV. The new tax additions are applicable to all new cars and SUVs sold in the country. Considering the taxations, an infra cess tax of 1 per cent will be applicable to small vehicles powered by petrol, CNG or LPG engines. For diesel cars with engines up to 1,500cc a 2.5 per cent infra cess will be applicable. The remaining diesel vehicles with higher engine capacity will be charged additional levy of 4 per cent. Subsequently, cars which cross the 10 lakh mark will be charged 1 per cent luxury tax along with the Infrastructure cess.

Commenting on the price hike, Rakesh Srivastava, senior vice-president (marketing & sales), Hyundai Motor India Limited (HMIL) said, "The increase in taxes has come as a big dampener and will further impact demand creating growth challenges especially for SUVs and diesel vehicles. This will necessitate a revisit of business plans."

Since the price hike will be observed across all automobile manufacturers it should not possess a hindrance in new car buying decisions. Manufacturers will probably introduce new variants to bring some vehicles under the 10 lakh mark to miss the 1 per cent luxury tax.

"The surcharge levied on cars over 10 lakhs coupled with the infrastructure cess at varying rates will increase the cost of acquisition. The auto industry is hopeful of early introduction of GST (Goods and Services Tax) and merging of all taxes for a simplified tax structure.” a company spokesman said.

The new tax structure will hold a challenge for Hyundai and other manufacturers who have scheduled the launch of new vehicles in 2016 in terms of pricing with rival models.

Amount hike applicable to Hyundai cars (all prices are ex-showroom, New Delhi):