The government has imposed an additional excise duty of about Rs. 15,000-20,000 as a specific levy on large cars, MUVs (multi-utility vehicles) and SUVs (sports utility vehicles) produced in India. Excise duty on cars of engine capacity exceeding 1500cc and upto 1,999cc has been increased by Rs 15,000 per unit. Similarly, vehicles having engine capacity in excess of 2,000cc will be costlier by Rs 20,000 per unit. However there was confusion whether additional duty would be applicable to imported vehicles or not.
Due to this duty, the prices of Maruti SX4, Hyundai Verna, Honda Accord and Renault-Logan are slated to go up by Rs. 15,000 each and cars such as Honda Civic, Tata Safari, Tata Sumo, Mahindra Scorpio and Bolero, Toyota Innova and luxury cars such as BMW, Mercedes and Skoda are set to cost Rs. 20,000 more.
The hike will have the maximum impact on companies such as Mahindra & Mahindra who produces utility vehicles only and on companies that do not have a presence in the compact car segment, like Honda Siel Cars India and Toyota. It will create a price differential among models in the same segment due to engines sizes.
