Snapshot: Impact of Union Budget 2012-13 On The Indian Auto Industry

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Here’s what the 2012-13 Union budget means for the auto industry, as well as the customer

Fuel Prices: No direct price increase, but we can hear the government talking about increasing petrol prices in the coming days, murmurs of slowly decontrolling diesel prices are also getting stronger. Expect to see the diesel prices go up and the trend to continue in the coming years
Extra tax on diesel cars: Breathe easy. No extra tax on diesel cars as of now.

Excise Duty: The government has increased the excise duty on cars. Here’s the impact on various segments

Luxury Cars: This segment will see the highest increment in prices. CBUs costing more than 40,000 dollars will have to face a flat 15% hike in excise duty. Shouldn’t impact the mainstream buyer much.

Cars over 4 meters: A 3% increase in the excise duty for cars falling out of the ‘Small Car’ definition. These are cars more than 4 meters in length and powered by a motor bigger than 1.2 liters for petrol, and 1.5 liter for diesel driven cars. Expect the prices to increase slightly.

Small cars: Cars coming under the Small Car definition will also witness a 2% increase in excise duty. Again, expect the prices to go up, but not as much as in the upper segments.

Hybrids and EVs: No change in tax structure for parts imported for the manufacture of such vehicles.

All in all, we see driving and riding getting more expensive, not by a great margin though. No new sops for the industry, but the government has allocated good funds for Infrastructural development. If implemented properly, and it’s a big if, it may help the auto industry grow that minute bit. We don’t see the auto industry reacting to this budget very positively.

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