New Delhi: Reflecting the effect of Union Budget 2012, Maruti Suzuki India is set to hike prices of the cars with immediate affect. Union Finance Minister Pranab Mukherjee on Friday presented the Budget in Lok Sabha on Friday.
Customs duty on completely built large cars SUVs and MUVs of value exceeding $ 40,000 (Rs 20 lakhs) was raised. Cars will now attract ad valorem rate of 27 per cent.
With the increase in the excise duty on all products in the Budget for 2012-13, car makers like Maruti Suzuki, Mahindra & Mahindra and Honda Siel Cars India will hike prices of their vehicles by up to Rs 70,000.
"We are going to raise the prices of all our products and will pass on the entire additional excise duty. Currently we are working on the exact amount of the hike," Maruti Suzuki India Managing Executive Officer (Marketing and Sales) Mayank Pareek said.
Homegrown auto major Mahindra & Mahindra also said it will increase the prices of its entire range of products.
"Given the current economic scenario and the revenue deficit of the country, the hike in excise duty was fully anticipated. Although the industry will not cheer about this, but we have to live with it," Mahindra & Mahindra President (Automotive and Farm Equipment Sector) Pawan Goenka said.
The industry will pass on the entire burden of excise duty to customers, he added.
"The input costs have also gone up in recent times. Considering this, we will raise the prices of our vehicles by 2-3 per cent, translating into an increase of Rs 6,000 to Rs 30,000," Goenka said, adding the exact amount will be fixed in due course of time.
The company will also increase the prices of its tractors by up to Rs 5,000 to Rs 6,000, he added.
"In the short-term, there will be an impact on the demand for the vehicles. However, if the interest rates favourably come down, we may see revival of demand in the auto industry in future," Goenka said.
Honda Siel Cars India Senior Vice President (Sales and Marketing) Jnaneswar Sen said prices of all locally produced cars will be raised.
"We will pass on the entire burden to customers. We are currently evaluating the quantum of increase. In case of small car Brio, it will be around Rs 7,000, while the same will be Rs 60,000 to Rs 70,000 for the luxury sedan Accord," Sen said.
General Motors India Vice President P Balendran too said the company will increase the prices of its all vehicles.
"We have not finalised the quantum of increase yet. We are going to pass on the entire hike. This is not a good step for the industry. It will further impact the sales," he added.
Finance Minister Pranab Mukherjee today announced raising of excise duty to 12 per cent from 10 per cent at present.
Excise duties for petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc, but the length exceeding four metres have been increased to 24 per cent from 22 per cent and a fixed duty of Rs 15,000.
Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc respectively will now be charged with an ad valorem duty of 27 per cent, instead of the earlier 22 per cent and a fixed duty of Rs 15,000.
With Additional Inputs from PTI
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