Proposed Extra Tax on Diesel Cars: Does it Make Sense?

We sat down and analyzed how much the prices of diesel cars have increased in the last 15 months. There is a definite swing for diesel cars and lack of it for petrols and car manufacturers along with the government are making full merry of the scene already.


Due to various excise duties hikes, tax increases and ex-showroom price increments car prices of B segment (as an example) have risen by as much as 17.5% or more. Ritz LDi which costed 5.20 lac in February with discount and ~5.40 lac without discount is now 6.10 Lac on road in Pune.

This includes ex-showroom price increase of 8 percent, around 10% increase on insurance, a whopping 66% increment on road tax which results in an on road percentage increase of 13% (without discount).

If we take Ford Figo TDCi Titanium as an example, prices have risen by Rs 87,000 in these 15-16 months. While Figo top-end was 6.20L on road Pune in Feb 2011, you have to shell 7.07 Lac if you have to buy it today. And that is already an increase of 14% over the earlier costs.

Now with the speculated extra tax on diesel cars, this would make these cars scarily and insensibly costlier. Imagine yourself shelling out 8-9 lac rupees for Figo TDCi Titanium! Ritz already has a difference of ~1.20 lac on its petrol and corresponding diesel variants.

Now, if any political bobbin sitting at his chair feels this extra tax on diesel cars would negate the current dieselification of the market, he might be dead wrong! Yes, these extra bucks would, for sure, make the government richer but make the car market snarl! Current market’s condition is already sluggish and at a big time low! If this gets implemented the biggest question would be “Whether we should buy a car or not?”

Instead, a better way is to reduce duties and taxes on petrol cars to make them an attractive buy. Prospect customers would be logging their heads on “Which one shall we buy – Petrol or diesel?”

Let’s hope sense prevails and we have sensible decisions made to curb political conditions beyond our control.

Do you agree with the mentioned solution? Do you have any other views on this? Please share them in the comments section.

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