Maruti, Honda, M&M & Tata hike car prices in response to Union Budget 2012-13

The Union Budget 2012-13 has left a sore feeling among the Indian auto makers by increasing the standard rate of excise duty by 2 percent. The major car-makers of the country like Maruti Suzuki, Mahindra Mahindra, Tata Motors and Honda Siel Cars India have decided to increase the prices of their products by up to Rs. 70,000. One of the biggest players of the Indian car market, Maruti Suzuki has immediately responded to this latest happening of the Union Budget 2012-13 with an increase in the prices of all its cars. According to Mayank Pareek, the India Managing Executive Officer of Marketing and Sales, Maruti Suzuki will pass on the entire additional excise duty by raising the prices of all its entire product range.

The small car segment of the Indian car market is flooded with the Maruti Suzuki cars. In order to align the prices with the recent changes, the company has planned to hike prices of its cars by around two per cent. By the end of this day, the company is expected to release the list of revised prices of its products. The native auto maker Mahindra Mahindra will also be hiking up the prices of all its products. The President of Automotve and Farm Eqipment Sector of the Mahindra Mahindra – Pawan Goenka, mentioned that the hike in the excise duty was pretty much expected looking at the country's current economic scenario and revenue deficit. He added that the entire load of the increased excise duty will ultimately pass on from the industry to the customers. Regarding the increase in the price of the vehicles, Mr. Goenka stated that the exact figures will be finalized with time but since recent times have seen an increase in the input costs also, the vehicles can see a rise of 2-3 percent. This increase in the car prices could range between Rs. 6000 to Rs. 30,000.

Mr. Goenka further indicated that the auto industry is expected to see a decline in terms of demand, in the near future. This situation can be controlled only if the interest rates come down favorably. The Indian auto titan Tata Motors has also increased the prices in proportion to the increase in the excise duty for all its passenger and commercial vehicles. Jnaneswar Sen, the Senior Vice President of Sales and Marketing division of Honda Siel Cars India also declared that the prices of all the cars that are produced locally will be increased. In the Union Budget 2012-13, the standard excise duty has been increased from 10 per cent to 12 per cent which will affect all the cars in the small car segment. The cars that are less than 4 meters in length are considered as smaller cars. Also, for a car to be considered as small the engine capacity for diesel units should be less than 1500cc or 1.2 liter and the engine capacity for the petrol units should be less than 1200 cc or 1.2 liter. Union Budget 2012-13 has resulted in the increased excise duty on all large cars (all cars outside small car segment). The duty has gone up to 24 per cent from the current figure of 22 per cent, also a fixed duty of Rs. 15,000 will result in the total excise duty of 27 per cent.