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Auto companies lobby against tax on diesel cars

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Leaders of the Indian automobile industry today opposed a proposal by the government to levy higher taxes on diesel-fuelled vehicles. The finance ministry has been considering this, to check the rising use of the subsidised fuel by car owners.

“It was a consultation meeting regarding the imposition of additional taxes to address the rapid shift in demand in favour of diesel vehicles. All manufacturers were unanimously of the opinion that such a levy would further affect the industry, which has already been struggling with slow sales”, said Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers.

 



The automobile industry, however, was open to a reduction in cost differential between petrol and diesel to redress the skewed demand pattern in favour of diesel vehicles. With petrol prices going up six times over the past year, the price differential between the two fuels has increased to a little over Rs 30 a litre. This has made an increasing number of consumers opt for diesel cars, despite an initial premium of Rs 80,000 these.

FUEL FURORE
The choice of car owners has shifted from petrol to diesel-fuelled ones

6 Number of times petrol prices have gone up over the past one year

Rs 30/litre Price differential between petrol and diesel

Rs 80,000 Initial premium payable on diesel vehicles has not deterred consumers from opting for diesel cars

35% Rise in sales of diesel vehicles seen during the last financial year

15% Decline in petrol car sales during the period

47% Increase in the overall volume in the passenger vehicle industry

Sales of diesel vehicles increased 35 per cent to account for 47 per cent of the overall volume in the passenger vehicle industry in 2011-12. Petrol car sales declined 15 per cent during the period. “Sales are already under pressure due to high interest rates and fuel prices. Consumer sentiment is low. If additional taxes are levied, whatever numbers are coming in will also be affected,” said an industry official.

Leaders of the Indian automobile industry today opposed a proposal by the government to levy higher taxes on diesel-fuelled vehicles. The finance ministry has been considering this, to check the rising use of the subsidised fuel by car owners.

“It was a consultation meeting regarding the imposition of additional taxes to address the rapid shift in demand in favour of diesel vehicles. All manufacturers were unanimously of the opinion that such a levy would further affect the industry, which has already been struggling with slow sales”, said Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers.

The automobile industry, however, was open to a reduction in cost differential between petrol and diesel to redress the skewed demand pattern in favour of diesel vehicles. With petrol prices going up six times over the past year, the price differential between the two fuels has increased to a little over Rs 30 a litre. This has made an increasing number of consumers opt for diesel cars, despite an initial premium of Rs 80,000 these.