[.anshuman]

Originally Posted by gkrishn

I personally feel that finance ministry should not have gone down to define what fits in small car segment and what dosnt. PC's argument is india will become hub for small car manufacture and also due space and fuel constraint.

Some companies have expressed that, this is going tilt the balance in the competition between small and big cars, or atleast for the companies which manufacture them. The definition looks specifically designed for the maruti.

it has already ben defined by finance ministry,the cars which will avail the benefits should less than 4000mm and 1200cc (petrol),1500cc(diesel).source- hindustan times - feb28,2006 delhi edition

[man23ish]

Well there are a few positive sides and more negative sides to the reduction in excise duties over car prices.

First the positives:
Since i am from the SUV/Pickup lover segment the small car segment is not for me. But a lot of small families would now be able to afford buying a small car. Most people riding scooters and other two wheelers would now move to the small car segment and there will be less auto-rickshaws on the roads. Since most people will be able to buy their own personal vehicles.. Helpful in decongesting the traffic on the roads. There will be more investment in the indian automobile sector, consequently resulting in an increased number of jobs.

Now the real picture:
1> Increase in oil exchequer to the government: India already depends on the OPC (oil producing countries) for about 70% of its oil needs. Add to that an increasing number of oil consumers, thanks to lowering the automobile costs, the fuel consumption will increase exponentially.

2> Parking will be a huge problem: We are not yet equipped with the state of the art parking facilities in India. Even in major cities in India or smaller towns of the country, a major problem is infrastructure. So a lot of people buying cars will result in acute parking problem.

3> Strain on the infrastructure: Our roads and bridges are not designed to be able to handle so many cars all at the same time. Already we are seeing problems where the roads designed to handle around 5000 vehicles per day have more than 15000 to 20000 vehicles plying on them on the cities. Maintenance of the infrastructure will be a big issue for the government.

4> People who can marginally afford to buy a car now at the current fuel prices will go ahead and buy the vehicle only to realise later that there is a cost to the maintenance of the vehicle. Especially with the fuel prices rising around the globe.


The alternative:
The government would have done well to improve the public transportation system in the country along the lines of the western countries. Improve the city bus service in all parts of the country. Presently only Mumbai can boast of the BEST bus service in the country.

[Joz]

Originally Posted by man23ish

Now the real picture:
.

Point 1: The other way to look at it would be that the government is trying to incentivise manufatcurers who are producing fuel effieicent small cars. Fuel prices are not going to reduce and will definitely increase in the future, so it also might help in making small cars more attractive to the consumers. Would you sell the SUV and buy a small car to reduce the burden on the exchequer? To reduce the dependency on oil producing nations, I think the country should focus on utilising alternatives like CNG/LPG/Fuel Cells and Hybrids.

Point 2 & 3: I agree, this will definitely happen. But to me, that ain't a reason good enough to not let the lower strata of the society ever own a car. Face it, as the economy grows our cities will become congested. Rather than restricting sales of cars, it would be essential that the infrastrucutre is developed. This will take time, but will definitely happen. Probably the government should also focus on scattering development to smaller towns than focus on just the few large cities.

I agree on the necessity to improve mass trasnport. This would be the logical way to lessen the burden on the infrastructure, rather than lament that more citizens will now be able to buy cars.

[man23ish]

Originally Posted by Joz

Point 1: The other way to look at it would be that the government is trying to incentivise manufatcurers who are producing fuel effieicent small cars. Fuel prices are not going to reduce and will definitely increase in the future, so it also might help in making small cars more attractive to the consumers. Would you sell the SUV and buy a small car to reduce the burden on the exchequer? To reduce the dependency on oil producing nations, I think the country should focus on utilising alternatives like CNG/LPG/Fuel Cells and Hybrids.

Well, let me clarify that migrating from a two wheeler to a small car increases the persons fuel-expenditure by almost 7-8 times. Most yuppies, living off their credit cards, would not think twice before going ahead and taking a loan to buy that dream small car to show-off to their friends, only to repent at a later point in time..

I agree with you here and the government should have gone that extra step by abolishing all taxes and duties on small hybrid cars and announce incentives for manufacturers promoting environment friendly hybrid vehicles.

Originally Posted by Joz

Point 2 & 3: I agree, this will definitely happen. But to me, that ain't a reason good enough to not let the lower strata of the society ever own a car. Face it, as the economy grows our cities will become congested. Rather than restricting sales of cars, it would be essential that the infrastrucutre is developed. This will take time, but will definitely happen. Probably the government should also focus on scattering development to smaller towns than focus on just the few large cities.

I agree on the necessity to improve mass trasnport. This would be the logical way to lessen the burden on the infrastructure, rather than lament that more citizens will now be able to buy cars.

I didn't mean to imply that the lower income groups should not be able to own a vehicle. Its just that the government should improve the infrastructure and provide a sustainable means for the people to own and use a car in the country. I know a few people who recently bought a car respectively only because they were getting huge discounts and got it financed through bank loans. Nothing wrong in doing that, except that they don't drive it anymore in the city worrying about parking hassles and fear of accidents..

[Steeroid]

Putting restrictions on people's ability to buy a car is a very antiquated socialistic viewpoint.

The Government's job is not to dictate what you should do or shoulnt. Instead, it should concentrate on ENABLING things. For that very reason, it is the governments job to create infrastructure, concentrate on city planning and other strategic decisions that will lay out broad guidelines for the way forward.

Excise duty rationalization is a step in the right direction, and doing so for small cars will enable such cars to serve the purpose they are intended for - they are the first fourwheelers for many families. IMHO, making small cars affordable is a step in the right direction as it would help more families to travel is relatively more comfort and a lot more safety. You will therefore see less overloaded two-wheelers with dad, mom, 2 kids, the gas cylinder and weekend shopping weaving through traffic.

[Joz]

I agree with Steeriod here.

And looking at it in layman's terms, why should a car which occupies much lesser space (infrastructure) than the big cars, consumes lesser fuel and pollutes lesser pay the same excise duties? Its completely fair that they pay lesser as they use(get) lesser.

[pmbabu]

I totally agree with Steeroid. Well said. The "dream" just got closer to reality for many families.

[lefthanddrive]

Originally Posted by nitrous

I heard there is a 23,000 rupee price cut for the Santro xing because of the 8% reduction in Excise. If so, was someone paying 2.5 LAKHS as excise duty alone for a Santro???

Nobody was paying 2.5 lakhs excise duty on a Santro
8% reduction in excise duty from 24% to 16%...
by your logic...may not be accurate... Rs 69,000 in excise duty
got reduced to Rs 46,000.

This is all assuming that Hyundai passed on the excise duty cut to the customer without reducing or increasing their profit margin.