Union Budget 2011: Cars and bikes not to get costlier

Union Budget 2011 impact on the auto industry in India, car and bike prices not to increase

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The auto industry in India prayed with both hands clasped as the Finance Minister read out his speech. Having witnessed stupendous growth last year and having spun their strategies around the definition of the ‘small car’ as spelled out by the government, they were hoping that the government did not roll-back the Sops provided during the recessionary phase. As you would know by now, Mr. Mukherjee’s budget speech is over, and it seems the industry has its prayers answered. The government has not made any changes to the excise duty structure on cars. In fact some sops have been introduces for green cars, but more on that in another post.

What the budget speech means for you, me and the industry, is that the prices of cars and bikes will not be affected due to any additional taxes. New car buyers can breathe easy now and dispel the ghost of having to pay 2-4% extra for their vehicle out of their minds.

That said the increased prices of commodities which have been affecting the profit margins for auto companies drastically, refuse to settle down. Auto companies may pass on the hike in the material costs to customers in due course, but having undertaken a similar exercise recently in January, we don’t see a price hike coming our way anytime soon.

So if you are planning to buy a new car or bike, the right time is now. For in the coming months, we expect the car manufacturers to announce a second round of price hike, amounting anywhere from 2-4%, as the monster of inflation keeps rearing up more and more violently

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