Budget Alert – SUV models and CBU imports become expensive

Posted on: Feb 28, 2013 - 4:13pm IST

The Union Budget 2013 is out and sadly there is nothing for the automotive industry to cherish.

Mahindra XUV500 for Australia front fasciaRenault Duster front

The SUV’s are set to become more expensive, thanks to the hike of excise duty from 27% to 30%. Finance minister Dr. P. Chidambaram stated that, “SUVs occupy greater road and parking space and ought to bear a higher tax. I propose to increase the excise duty on SUVs from 27 per cent to 30 per cent. However, the increase will not apply to SUVs registered as taxis.”

Lamborghini Gallardo LP 560-4Audi R8 2012 rear three quarters

The move would affect many automakers who specialize in SUVs like Mahindra, Force Motors, Toyota and the new entrant Isuzu. At the higher end of the range, companies like Jeep, Audi, BMW, Volvo and Land Rover would take a hit.

Apart from the SUV’s, the budget has also increased the import duty for the high end Completely Built-up Units (CBU) from 75% to a whopping 100% (75% duty applied previously for imports which have a landing cost of more than $40,000). Among the most affected would be players like Jaguar, Land Rover, Volvo, Bentley, Rolls Royce and supercar makers like Porsche, Lamborghini, Ferrari, etc.

2012 Land CruiserRange Rover

Land Rover emerges as the worst hit victim since their entire portfolio comprises of SUVs and all of them are CBU imports with the exception of the Land Rover Freelander 2. Volvo comes in at a close second as they import all their cars and rely largely on SUVs.

It is unclear as to what is the government’s definition of SUV. We are investigating whether MPVs like Maruti Ertiga, Toyota Innova and the Chevrolet Enjoy will also get affected by the duty hike or not. After all they occupy as much real estate as SUV’s.

The hike of excise duty for SUV’s is sure to affect the overall growth rate of the auto industry because the SUV segment is one of the fastest growing in the country.

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9 thoughts on “Budget Alert – SUV models and CBU imports become expensive

  1. Bharath says:

    I welcome this move, the richie richs are enjoying the maximum subsidies. When the farmers suffer a lot for filling their tractors with diesel, these owners of big cars greedily use it, polluting more. So let them pay more. ๐Ÿ™‚

    “Our planet has enough resources to satisfy every human’s need but not greed” – Mahatma Gandhi

    1. Mohinder Bir Pal Singh says:

      The move is welcome from the point of view of taxing the super rich and not the common man. Unfortunately my friend, the pollution is caused by the innumerable number of outdated buses, the Vikrams, Tempos etc that ply countless times each day within our cities and around it. Where as the increase of a measly 3% will hardly dent anyone’s pocket, whether super rich or the middle class as I too am taking delivery of the Duster soon. Regards, …….. Mickey.

  2. Sunish says:

    As per Times of India, The government defined an SUV/utility vechcle as a vehicle that has an engine capacity exceeding 1500 cc; is over 4000 mm in length and has a ground clearance of 170 mm and above. If avehivel meets all the three criteria, it will face a higher excise duty

  3. sandy says:

    What about the products like Ecosports, Premier Rio and Quanto? I think SIAM should ask them what is their definition on SUV.

  4. Prabhu says:

    A Renault Duster occupies much lesser road/parking space than say a Skoda Superb or VW Passat, but it would attract a higher Tax rate???? Absurd !!

  5. Ganesh says:

    If a Sedan took more space than a Suv like Duster / eco-sport? Is this guy nuts?

    And make it 200% in CBU’s who cares? The people who can buy these expensive cars can buy no matter what the tax is, becaus it is not their money after all ๐Ÿ™‚

  6. f150 says:

    What about Renault Duster, is it a SUV or a crossover

    1. Its SUV, its going to affected by this announcement.

  7. DevVrat says:

    real estate is funny..


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About the Author
Nithyanandh K

As a toddler, those wheeled machinery fascinated me even before I knew what theyโ€™re called as! So here I'm, petrolhead by birth, Mechanical engineer by qualification and automotive reporter by profession!