Luxury & SUV cars become expensive

Import duty on motorbikes also increased.

Driving a Sports Utility Vehicle will cost anotch more than before owing to the fact that driving one takes more space on the road and for parking! The excise duty on Sports Utility Vehicles (SUV) will be raised to 30 per cent from 27 per cent. SUVs registered as taxis are exempted from the same. 

Customs duty on new passenger cars and other high-end cars costing more than USD 40,000 and/or engine capacity exceeding 3,000cc for petrol run vehicles and exceeding 2500 cc for diesel run vehicles has been hiked 100 per cent from 75 per cent earlier. High end motor vehicles, motorcycles, yachts and similar vessels also become costlier as duty on yachts and similar vessels has also been raised to 25 per cent from 10 per cent.  Import duty on motorcycles above 800cc will go up from 60 per cent to 75 per cent. 

Michael Perschke, Head, Audi India says, "Increase in Custom Duty for imported cars and Excise Duty on SUVs is very surprising. It will severely impact the auto industry and its growth. We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer. Overall it will have an adverse impact on automobile industry which is already going through a slowdown and specifically affect demand including that of SUVs. Currently, the industry is facing pressure from a number of factors like increasing fuel prices, high input costs, persistent inflation, high interest rates; the increase in excise and customs duty will be a dampener. The government should have looked at extending support to auto industry, which has been contributing, significantly to the GDP and could have formed a strategic pillar of industrial development. We are happy to note that there is a renewed focus on infrastructure especially roads. The proposed regulatory authority on road construction will hopefully fuel better infrastructure and speed up developments."