Motoring Trends September-October 21

October, 2021

Automobiles in India are beginning to look overpriced. Right from a moped to the heaviest truck on offer, the price tags of automobiles are seeming to exceed the purchasing power of a vast majority by a good margin. The reason behind such an occurrence could be the result of many factors, including some that are easy to see. The first of these is the series of price hikes that were carried out at close intervals. The reason behind these is the rise in input costs. The other is the regulatory frameworks. Their intensity seems to have gone up. The most prominent being the BS VI emission regulation. The prices are estimated to have gone up by a significant 10 to 12 percent. Such was the fury of BS VI transition that many models were discontinued; those that passed the muster were greatly rationalised. 

It is no secret that the automotive industry is making valiant efforts to keep costs under control. Pressures concerning Return On Investment (ROI) have risen. It does not surprise therefore that two veteran leaders from the auto industry spoke about the 28 percent tax levied on automobiles at a recent industry event. They are known to have said that in the presence of top leaders and government officers. In fact, one of the veteran leaders is also known to have expressed that even a tiny moped in India is taxed at 28 percent, a tax rate that is considered to be levied on sin goods (luxury goods, in other words). In India, trucks and buses are also taxed at 28 percent. They help people to travel and prevent the breakdown of the country’s supply chain. 

A recent editorial in a leading vernacular newspaper mentioned that automobiles in India are taxed between 39 and 80 percent overall. They are also subject to numerous cesses at the central and state level, the newspaper editorial informed. Once out on the road, autos are further subjected to numerous tolls and some highly unprecedented taxes levied by regional government authorities or elected councils. Consider this: In Japan, a country known for its world-class road infrastructure and technologically advanced cars, the rate of automobile taxation ranges between 18 and 22 percent. In Germany, which is famous for its Autobahn and as a manufacturer of some of the finest automobiles and machines ever, the taxation rate ranges between 19 and 20 percent. Bridging the gap with markets by transitioning to BS VI emission norms, the Indian auto market has come a long way. However, in other areas like safety, technology and user experience, it has a long way to go. There’s much distance to be covered in terms of providing world-class road infrastructure. 

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