To offset the excise duty hike in Budget 2016-17, Indian automotive Giant Mahindra and Mahindra has announced its plan to hike vehicle prices between Rs 5,500 to Rs 47,000. The increase in passenger vehicle would be effective from 1st April, 2016. However, the company has hiked the price for recently launched KUV100 with immediate effect.
Speaking more on the occasion Pravin Shah, Mahindra Chief Executive said to PTI, "Though the 1-4 per cent duty hikes are already effective, we have decided to pass on the price increases only from April 1. Prospective customers can still avail of our various passenger cars at the pre-Budget prices all through March. In absolute terms, prices will go up by Rs 5,500 to Rs 47,000, depending on the model and prevailing prices.”
Pravin Shah further added that KUV100 which was launched mid-January this year shall will attract new prices with immediate effect. As per the new budget, the petrol model gets costlier by 1 per cent, while the diesel model costs higher by 2.5 per cent. Following the Budget proposal to increase excise duty to the tune of 1-4 per cent and an additional cess, almost all the automakers led by market leader Maruti have increased retail prices to pass on the duty increases and protect bottomlines.
Recently, country’s major automotive player Maruti Suzuki had hiked the car prices up to Rs 34,494 to offset impact of infrastructure cess. Following suit, other key players in the Indian market namely Hyundai, Tata Motors, Toyota, Honda Cars, Mercedes-Benz, GM India, BWM, Renault, Nissan, Honda, and Skoda have also announced price hike depending on their ex-showroom prices in each state. The new prices vary from Rs 2,000 for Tata Motors to about Rs 5 lakh for Mercedes. Mercedes and Skoda had increased the vehicle prices in January as well.
When asked about the customer response to KUV100, Shah said it has been very good forcing the company to ramp up production by an additional 3,000 units. The decision to increase output comes as there is a 8-10 weeks waiting period for the new car as the company has 27,000 pending orders. The company has a combined 9,000 capacity for XUV500 and KUV100 models at the Chakan plant and the proposed new capacity will only be for KUV100, Shah said. When specifically asked about the petrol model of KUV100, he said it has been beyond their expectation as the demand is almost 50:50 for both the variants.
On TUV300 launched last September, he said, it is notching up around 3,500 units a month. When asked whether the company, which has been continuously reporting falling sales, expect last month, is out of the woods, having made some success with the new models, Shah parried a direct answer, saying except for the duty hike in the Budget, which is a big challenge, the Budget is good with its focus on infrastructure development.
Shah further added that, "The new duty structure is too complicated and once a new duty is imposed it remains forever in our country. So is the case with cess. So for us, we are keenly awaiting the rollout of GST. However, I welcome the Budget for other things.” The Budget has also imposed a complicated duty hike on auto companies with about 2.5 per cent cess on diesel vehicles of length not exceeding 4 meters and engine capacity not exceeding 1,500 cc, and 4 per cent on higher engine capacity and SUVs and bigger sedans. Apart from this there is a 1 per cent hike on petrol/LPG/CNG driven vehicles of length not exceeding 4 meter and feature engine capacity that is not exceeding 1,200cc.
