Union Budget 2010: Free-wheeling gets dearer

Buying and maintaining a car or a bike got a lot more expensive with the government announcing a 2% hike in excise duty, leading to an immediate near-corresponding increase in vehicle price across categories. The ride was made further bumpier by the decision to increase excise on petrol and diesel, making your running costs dearer.

Ditto for components. You would have been wiser to have changed your old tyres or battery for as SP Singh, convener, All India Tyre Dealers Federation, says, “We have been informed by all tyre makers that they are resorting to a 2% hike effective midnight tonight.”

The government’s decision, taken as part of a partial rollback of the stimulus package in the Union Budget, saw companies announcing corresponding increases in prices almost immediately. These included big volume players like Maruti, Hyundai, Tata Motors, Mahindra, General Motors and Honda.

The Budget saw excise on small cars go up to 10% while on big cars, multiutility vehicles and SUVs, it went up to 22%. It, however, gave good news for electric vehicle makers as it imposed a 4% duty on them, helping manufacturers avail duty drawback on inputs and bring down their manufacturing costs.

“Prices have to go up with the increase in excise and our cars will become dearer by 2% across the board,” Maruti chairman RC Bhargava said. Maruti’s model range, that includes cars like the Alto, Swift, Dzire and SX4, will see a price hike between Rs 3,000 and Rs 1,3000. Alto, the country’s biggest-selling car, will likely be dearer by around Rs 4,500.

Hyundai said the hike on its cars will be between Rs 6,500 and Rs 2,5000. The price of the Santro is expected to be up by Rs 6,500, the i10 by Rs 6,700 and the i20 by Rs 9,500. “The increase will be on all the models,” Hyundai India’s marketing and sales director Arvind Saxena said.

For Tata, the hike will be between Rs 4,600 and Rs 18,700 on models ranging between the Indica, Indigo, Sumo and Safari. The company, however, has decided to spare the Nano from the revision.

A pair of heavy duty truck tyre would now cost Rs 500 more, while that for a sedan will be higher by Rs 250 a tyre. Batteries will be dearer by 2%.

Source Indiacr.com Source : Economic Times (2/27/2010)