Union Budget 2012-13: hard days ahead for car makers

Barely had the finance minister finished his Budget speech, than came a near simultaneous announcement from most car makers of a price hike, says auto analyst K Shivraj

Already reeling under rising input costs and higher interest rates, the 2012 Union Budget looks set to create more hurdles for the Indian auto industry.

Finance minister Pranab Mukherjee announced in his budget speech that the standard excise study has been increased from 10 per cent to 12 per cent, and the service tax has been hiked from 10 per to 12 cent.

The immediate fallout of  these measures was an announcement today from most Indian automakers of a price hike.

For small cars buyers, the budget may not be a cause for concern since fuel prices have not been hiked. Small car prices are not likely to be raised. As far as the bigger vehicles are concerned, buyers could be looking at shelling out anywhere between Rs20,000 to Rs70,000, or more!

The first off the block was Maruti Suzuki, which announced a price hike in response to the hike in excise duty. General Motor India followed with an announcement to hike the prices of its products.

Reacting to the budget, P Balendran, VP, corporate affairs, GM India, said, ''As far as the automotive industry is concerned, the budget did not meet the expectations''.