Price hike may hit car sales

Mumbai: Following the withdrawal of excise duty concessions granted to the auto sector, the prices of four-wheelers across the board have increased by 4 per cent. According to industry experts, going ahead, the rise in prices could hit the demand for passenger cars and sports utility vehicles.

“It is too early to assess the impact of the withdrawal of excise duty concessions from January 1, 2015. However, it could lead to some kind of subdued consumer sentiment. We will have to wait and watch what the impact is,” said Rakesh Srivastava, vice-president, sales and marketing, Hyundai India on the sidelines of an event.

In the interim budget, the UPA government had reduced excise duty to 24 per cent from 30 per cent in the case of sports utility vehicles (SUVs). Similarly the excise duty on mid-sized cars was reduced to 20 per cent from 24 per cent and for large cars, the same was reduced to 24 per cent from 27 per cent. Later, the current government, which assumed office in May 2014, extended the excise duty concessions till December 31, 2014.

Mr Srivastava pointed out that the industry’s volume growth during 2014, was a little subdued despite having a lower base effect. In 2014, the domestic automobile industry posted a sales growth of just about 3 per cent as higher interest rates and subdued consumer sentiment led to weaker demand.

However, the industry is hoping for a turnaround in 2015. “There is a new government at the Centre. If the ease of doing business improves and new invest-ors come, there would be large-scale job creation. This augurs well for the auto sector,” he said.