Premium car segment is on the rise these days, especially when it comes to the entry level premium hatchbacks. Volvo recently updated the Volvo V40 and V40 Cross Country models of its Indian portfolio and even though premium cars have managed to garner a lot of attention recently, it still remains to be seen how the upcoming budget and its effect on excise duties will lay down the foundations for Volvo's success in India. In a conversation with us, Tom von Bonsdorff, Managing Director, Volvo Auto India shared his thoughts on the 2016 Union Budget.
Q.1 Overall what do you think is the industry sentiment with respect to budget 2016?
The industry is looking at the General Budget 2016 to give a very big push to economic growth which is showing signs of slowing down. It is looking at reforms in the financial and banking sector with lot of hope. The industry and business are subdued in the overall sentiment and are looking at measures in the budget to not only revive the investor sentiment but also confidence. The sentiment overall is of optimism and this is termed as some experts as make or break budget.
Q.2 What are your expectations from Union Budget 2016?
The government will be looking at realignment of indirect tax structure and that could mean hike in excise duty and also increase in service tax. This would be generally done to make the tax rates almost at par with the proposed GST regime.
“Keeping in view the concerns about rising air pollution levels across Indian cities and the resolve to introduce new emission norms for automobiles, we are hopeful that the government would announce appropriate measures/incentives in the budget to deal with the situation on these two fronts. We also look forward to an announcement pertaining to replacement of old cars which would help removing polluted cars which do not comply to current emission norms from the roads. In the forthcoming budget, we expect the government to encourage auto companies shift to new technologies in the automobiles to make them more safe and secure for the passengers. We expect incentives for promotion of electric cars and Plug-in Hybrids which would be a welcome move.”
Q.3 What are the top 3 things you would like to see from the Union Budget 2016-17 that would favourably impact the auto industry?
( i) We would like the budget to spell out a clear roadmap for implementation of the new GST regime. We would also seek a policy clarity on manufacture and use of diesel vehicles not only in Delhi and NCR but also across the country through a regulatory framework.
(ii) Auto sector seeks guidelines/policy for pollution and safety. The pollution level is increasing across the cities and we hope the government would announce appropriate measures/incentives in the budget to deal with the situation on this.
The car sales are increasing in India with ignored safety measures, recently NCAP (body that regularly crash tests cars in Europe) has done test on Indian cars to check the UN safety and most of the car have failed to qualify. Hence we look positive for a policy on the safety measures.
iii) Auto sector seeks support for promoting hybrid and electric vehicles. Extending the sunset clause period for such excise and custom duty concessions beyond March 2016 would give a big boost to the hybrid/electric vehicle industry.
Q.4 What are the learnings government should take from the 2015 budget?
(i) The government does appraisal of its policy statements from time to time and we expect that it would take a conscious policy decision in the Budget 2016 to give a boost to the automobile sector.
Q.5 According to you what will be the excise duty for SUVs, will it? (increase, decrease or remain same)
We expected a positive situation for the automobile sector but would not like to comment on decrease or increase on a particular sector and look forward to a comprehensive policy statement on this issue in the budget. We should hope for policies based on proper investigation and facts. With the right power train technology, it is cleaner than most other smaller vehicles. Also, safety will never be compromised upon, if you have the right safety technology. +2000cc rule is not the right way to go. Pollution performance and compliance with norms is the right way.
Q.6 According to you what will be the excise duty for midsized cars, will it? (increase, decrease or remain same)
Although SIAM has put forward asking for two rates - one for small cars and one for large vehicles. We hope the Finance Minister will take a sympathetic view of SIAM’s recommendations.
Q.7 According to you what will be the excise duty for large cars, will it? (increase, decrease or remain same)
The differential in excise duty has grown over the years. Although SIAM has put forward asking for two rates - one for small cars and one for large vehicles. We expected a positive situation for the automobile sector but would not like to comment on decrease or increase.
As I said earlier, we should hope for policies substantiated with accurate statistics and data. It is not about the size of the car. Large cars could be cleaner than most other smaller vehicles, if they have the right powertrain technology. With the right safety technology, it will never be a safety hazard. Also, I strongly believe that pollution performance and compliance with norms is the right way to evaluate with safety as the priority.
Q.8 According to a recent CarDekho survey, 70% of car buyers would be interested in hybrid vehicles if relevant sops are extended for them. What would be your plans to cater to latent demand for "Green"vehicles?
Volvo cars has been one auto company that wasn’t affected by the diesel car ban in Delhi- NCR catering to sub 2000 cc litre engine.
We have also taken the lead to further clean the air in and outside our vehicles. Inside our cars we have CleanZone carbon filters which restricts particulate matter from entering the cabin. Volvo Cars was the first car company in India to make Diesel Particulate Filters (DPF) standard way back in 2007. DPF reduces emission of particulate matter PM2.5 and PM10 by upto 99%. All our cars are Euro6 compliant including the XC90.
Volvo Cars is a pioneer in the field of plug-in hybrid powertrain development. In 2012 the company was the first in the World to launch a premium diesel plug-in hybrid. Volvo Cars is launching the XC90 T8 in India in 2016, it is a powerful 400hp petrol plug-in hybrid and the European mileage cycle of approx. 46 km/l. Our global ambition by 2020 is to have 10% of Volvo’s global sales as electrified cars.
Q.9. Any additional inputs or comments on the budget?
We have already made our position clear on the various aspects of the budget and our expectations from it. Volvo is strongly eying for preponing the emission norms. Modern Volvo diesel engines equipped with DPF are very efficient and clean. We expect strong action from the authorities on comprehensive, consistent long term decisions, which include improvement of fuel quality.
