Budget 2012: Reactions From Automobile Manufacturers

There have been mixed reactions from the various Automobile Manufacturers on the Budget 2012. While there have been some good news going in their favor there definitely are negatives involved. Read what some of them have to say:



Mr. Michael Boneham, President and Managing Director, Ford

One of the clear takeaways from the Union Budget 2012-13 is the impetus it will provide to infrastructure development, with its focus on improvements in areas like the power sector and road network development. The stimulus to social sector is progressive and a welcome step towards development of the economy. We are also pleased with the Government’s decision about not levying extra tax on diesel vehicles as any additional tax would have been a regressive step. However the announcement of a 2 per cent increase in excise duty is disappointing and not favorable towards the auto industry. This will lead to increase in prices of our products and will have negative impact on consumer confidence. The increase in excise duty for large cars up to 27% (advelorum) is again not favorable though we are assessing its full impact on our product portfolio.


Dr. Pawan Goenka, President (Automotive), Mahindra & Mahindra

Specific to automotive industry, the industry is relieved that the FM did not take any retrograde step like imposing a tax on diesel vehicles. The excise duty hike was in a way expected and we will have to pass on the price increase to the consumer. However, with all the surcharges and special levies, the top excise duty rate is as high of 29%. I believe this is simply too high!

For Mahindra vehicles, the price increase would be as low as Rs. 3,000 to a maximum of Rs. 35,000 depending on the product category. On the tractor side, service tax and excise duty hike will also increase overall input cost and therefore an immediate increase of Rs. 3,000 – 5,000 is expected. We expect some short term negative impact on demand but with time we think it will wear off.

Other positive steps are extension of weighted deduction of R&D by five years, introduction of weighted deduction for skills development and reduction in taxes and duties for hybrid and electric vehicle components.

We do not expect any major depression in demand growth as a result of the budget and hence do not expect our investment plans to change


Mr. Sandeep Singh, Deputy Managing Director, Sales and Marketing, Toyota

A rise in excise & import duty and input costs will not be very conducive for the auto industry as the additional burden of increased duty will directly affect the buyers and hence would lead to slowdown in sales. CBU prices will also be affected on account of a rise in customs duty.

We have no choice but to pass on the price increase to the consumers. The average increase in price ranges from 2 to 4%.


Mr. Neeraj Garg, Member of Board and Director, Volkswagen

The duties announced will definitely act as a growth deterrent for the overall auto industry. Moreover, it becomes difficult to plan our long and mid term strategies in such a volatile market.


Lowell Paddock, President and Managing Director General Motors India

As far as the automotive industry is concerned, it did not meet the expectations. The industry did not expect any increase in excise duty on passenger cars. In fact, the industry expected the government to announce   some other measures to fuel demand of vehicles which have also not happened.  This was essential as the automotive industry makes a significant contribution to the growth of the economy which continues to remain sluggish


Audi India Head Michael Perschke

The increase in excise and customs duty on large cars in this budget is very surprising. This increase comes at a time when the Indian automotive industry was finding favor with customers looking for better and efficient cars. We may now need to re-evaluate our pricing strategy in India.

However we do welcome the positive announcements on increase of investments in infrastructure and encouragement to private investment which should drive higher growth in the economy. The revision and reduction of personal tax slabs  will result in increased savings and possibly higher spends. The GDP growth forecast of 7.6% for next financial year also augurs well for the country and we expect India to remain one of the most vibrant consumer markets.



Source: Team-Bhp.com

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