'In India, cars are taxed more than cigarettes'

Honda Cars India Ltd on Thursday said there is a ‘high’ incidence of taxes on automobile sector, saying ‘cars are more taxed than cigarettes’ in the country.

"Today if you look at incidence of taxes on car whether it is excise duty, CST, calamity tax, education cess, value added tax, road tax. . . . if you look at all these taxes on car, probably cars are more taxed than harmful things like cigarettes. . . taxation is extremely high," company's senior vice president (marketing and sales), Jnaneswar Sen told reporters in Chandigarh.

Sen said incidence of tax might be ranging between 50-70 per cent depending on cars.

Citing an example, he said, "If we are selling car at Rs 100 which is coming from a factory, customers are probably purchasing at Rs 150 to Rs 175 due to most of these taxes.

“Except transportation cost and dealers margin, the rest is tax which is 50-70 per cent."

He also rued about the fact that there was no uniformity in rates of taxes in the states.

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"In some states, VAT rate is 12.5 per cent and in some other places, it is 14.5 per cent. Road tax is 4 per cent at one place and it is 16 per cent," he said.

Sen also underscored the need for more clarity on the subsidy being given on diesel.

"Because of lack of clarity on (the issue of) subsidy on diesel. . . will it (subsidy) continue or will it not . . . There is no clarity.

“We have invested in diesel cars but many people (players) are thinking whether to invest or not (in diesel).

“What will happen we do not know. What will happen to CNG we do not know," he said.

"Fuel policy is directly impacting car industry.

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“Car industry which runs on both petrol and diesel and its mix is determined by prices of petrol and diesel. How much we produce diesel and petrol. . .(fuel) prices are changing every month.

“The ratio of petrol and diesel (cars) is changing every month," he said.

He further noted that the excise duty cut announced by Centre in the month of February this year had failed to bring growth in automobile sector.

"The current government (at Centre) reduced excise duty in February but there is still no growth. Market sentiments are not positive. Customers are still waiting and postponing the purchase of cars," he said.

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Sen said the industry wished stable government at the Centre which should bring stability in policy.

On the issue of recalling of cars, Sen said, "It is an issue of miss assembly. There is no complaint so far from customers.

“We expect only 3,000 cars would require any change of parts."

Honda Cars India Ltd recalled 31,226 units of select variants of the Amaze compact sedan and Brio hatchback to inspect them for a possible defect in the brake system.

Asked about new launches this year, Sen said that the company would roll out new model Honda Mobilio and reintroduce Honda Jazz this fiscal.

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"Mid size 7 seater Honda Mobilio in MPV segment will be launched in next quarter. Honda Jazz will be reintroduced in later part of this year probably end of third quarter or in fourth quarter.

“Both models will have petrol and diesel variants," he said.

However, he refused to give details about the pricing of new launches.

He said the MPV segment market size in the country stands at 10,000-12,000 units per month.

"We want to evolve this segment with the launch of Honda Mobilio," he said.

About company's performance last fiscal, he said the company posted its highest ever annual sales of 1,34,339 units during financial year 2013-14, recording 83 per cent growth over previous fiscal because of the success of Honda Amaze and 4th generation Honda City.

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So far the company has sold about 80,000 units of Honda Amaze and 30,000 units of 4th generation Honda City, he said.

The ratio of petrol and diesel cars in total sales is 45 per cent and 55 per cent, respectively.

On expanding dealers' network, Sen said the company would enhance its network by 35 per cent this year with focus on tier II and tier III cities.

"The company currently has 170 facilities in 107 cities in its network and this will increase to 230 facilities in 150 cities," he added.

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