Reduction In Motor Car Duty

[rangerover]

Guys,

I heard from a very reliable source that duty prices of motor vehicles would be reduced from the 280% odd to 180% (for petrol) odd by the budget this April or may. Im not sure what all categories are and or whether the reduction would be staggered. But what i was told is that it will be reduced to rates that exsisted during 2006/2007

How do you think this will affect the exsisting car market of second hand cars and unregistered cars already imported and idle at sales.?

Would the effects of such a reduction be immediately felt for prospective buyers and sellers?

Wonder how leasing companies would react

[wug]

Definitely car prices reduce. If u ar willing to buy a car wait untill budjet.

[Ripper]

  rangerover said:

Guys,

I heard from a very reliable source that duty prices of motor vehicles would be reduced from the 280% odd to 180% (for petrol) odd by the budget this April or may. Im not sure what all categories are and or whether the reduction would be staggered. But what i was told is that it will be reduced to rates that exsisted during 2006/2007

How do you think this will affect the exsisting car market of second hand cars and unregistered cars already imported and idle at sales.?

Would the effects of such a reduction be immediately felt for prospective buyers and sellers?

Wonder how leasing companies would react

IMHO i think it all depends on how they implement the whole tax reduction thing.

say if they only apply it to b/new vehicles and still the gap between b/new and recon is not that wide...i doubt it will have a huge impact on used car prices here.

[Watchman]

April or may?? hmmmmmmmmmm.....

Didnt similar stories start in the months leading to the January election?

IMO, tax reduction on cars is NATO.

[shazzy]

the reduction is only for dual purpose vehicles bro!!!! meaning vans and double cabs i guess!!!!!

[rangerover]

I was under the impression it was accross the board?

Since the government is failing to meet the IMF stipulated budget deficits this year, i would expect the it to drop taxes of motor cars as well if it is hoping to improve its revenue on tax.

What happen last time before elections was that the leasing companies lobbied against it with the president. Lets hope that does not happen again!

[madmax]

  rangerover said:

Since the government is failing to meet the IMF stipulated budget deficits this year

Does the government even listen to IMF? The way it's acting I don't think they are concerned about what the international community thinks. That seem to to have both good and bad consequences. Good thing is that we won't be run by western powers. Bad thing is we'll end up in the list with rowdy countries like Iran, Libya and China. But the difference is Iran and Libya has oil money. China has both money and power. They can stand up on their own. We have nothing to stand up against then rest of the world.

[isurujosh]

  rangerover said:

I was under the impression it was accross the board?

Since the government is failing to meet the IMF stipulated budget deficits this year, i would expect the it to drop taxes of motor cars as well if it is hoping to improve its revenue on tax.

What happen last time before elections was that the leasing companies lobbied against it with the president. Lets hope that does not happen again!

but then there's always the impact on forex rates. i think one of the main reasons why we have been able to keep the forex rates at bay since of late is the impact of taxation on imports. it's not as simple as you might think it is.

[isurujosh]

  shazzy said:

the reduction is only for dual purpose vehicles bro!!!! meaning vans and double cabs i guess!!!!!

great!

[xXx]

  Ripper said:

IMHO i think it all depends on how they implement the whole tax reduction thing.

say if they only apply it to b/new vehicles and still the gap between b/new and recon is not that wide...i doubt it will have a huge impact on used car prices here.

as far as i know (don't quote me on this) both brand new and recon imports go through the same tax structure and percentiles. its the non existence of the yearly depreciation and the and initial high cost of been a brand new car that cause the huge price gap between the two categories.

but as you say if they do end up coming with a new tax structure for brand new cars then i have a feeling lot of buyers will lean towards the cheap indian and chine’s makes. and that can reduce the demand for older used jap cars.

[xXx]

  rangerover said:

Since the government is failing to meet the IMF stipulated budget deficits this year, i would expect the it to drop taxes of motor cars as well if it is hoping to improve its revenue on tax.

government is not 'failing' machang it has 'failed' to meet the IMF target and they have decided to held back the third trench. Not that this was expected from the start. it was a very steep target for our standards to keep the deficit at 7%. even though our revenues increased by a considerable margin we missed out due to the lack of measures taken to curb the outrageous expenditure.

there was a school of thought that the government never intended to remain committed to the full IMF program and they only wanted the first couple of installments simply to stave off the balance on payment crisis and to hold the economy together till the elections are over. it sure is heading that way as the next IMF assessment is due in may after the 2010 budget. And if the budget is set to be in line with the IMF criteria then the government have to cut down the expenditure meaning having to withdrawal some of the reliefs/subsidies given to the poor like the fertilizer subsidy and this will be against the ‘suba anagathayak’ manifesto.

anyway you got a very good point. there is definite need to bring down the taxes to kick start the automobile imports which'll in return increase the revenue. but i don't understand why leasing companies would go against this move as it'll increase the volume of car sales. only reason i can think of is since almost all the leasing companies have a huge stock of ceased vehicles they don't want the market to drop before they can dispose them.

[xXx]

  madmax said:

Does the government even listen to IMF? The way it's acting I don't think they are concerned about what the international community thinks. That seem to to have both good and bad consequences. Good thing is that we won't be run by western powers. Bad thing is we'll end up in the list with rowdy countries like Iran, Libya and China. But the difference is Iran and Libya has oil money. China has both money and power. They can stand up on their own. We have nothing to stand up against then rest of the world.

very nicely summed up madmax. so which role do you think we should adopt? 'chandiya' role or the 'nondiya' role???????

[xXx]

  isurujosh said:

but then there's always the impact on forex rates. i think one of the main reasons why we have been able to keep the forex rates at bay since of late is the impact of taxation on imports. it's not as simple as you might think it is.

you got a very good point. but then again we have always been in a situation where the imports surpassed the exports. the underlying problem we have in regards to forex is the none existence of a long term fiscal policy. we've maintained a habit of coming up with runaway budgets solely financed by printer money that only seems to address the needs of the politicians or political alliances. best example is the 2004 and 2005 budget proposals that were catered to accommodate JVP and mahinda chinthana ideologies and the results were inflation at 25%+ and a severe balance on payment crisis.

[isurujosh]

  xXx said:

you got a very good point. but then again we have always been in a situation where the imports surpassed the exports. the underlying problem we have in regards to forex is the none existence of a long term fiscal policy. we've maintained a habit of coming up with runaway budgets solely financed by printer money that only seems to address the needs of the politicians or political alliances. best example is the 2004 and 2005 budget proposals that were catered to accommodate JVP and mahinda chinthana ideologies and the results were inflation at 25%+ and a severe balance on payment crisis.

the trade deficit has reduced quite significantly. isn't that a good start? we cannot expect "ideal" market economic meaures from this government.

[rangerover]

I guess, the leasing companies are worried because, customers would default payments. I mean if duty prices come down significantly, who would want to pay the same lease rental for a car that is may be valued 25% cheaper

Worst part is for people who spent 7 - 8 million on a new toyota to suddently realise that their cars are now valued 2 million cheaper. Talk about devaluation.

[DevakaC]

  rangerover said:

I guess, the leasing companies are worried because, customers would default payments. I mean if duty prices come down significantly, who would want to pay the same lease rental for a car that is may be valued 25% cheaper

Worst part is for people who spent 7 - 8 million on a new toyota to suddently realise that their cars are now valued 2 million cheaper. Talk about devaluation.

I seriously would not have my hopes high on this duty reduction. Haven't we heard this waaay too many times now? Its like a wind before a storm, keeps coming before elections. What goes up stays up in this land like no other. As some of our members mentioned the leasing companies are against it, the car sale guys who already have inventory are against it and of course Maruti will be against it. Well, a reduction in duty would result in higher demand and higher tax revenue to the govt in return but the trade off will be foreign exchange cash outflows radically increasing with the new demand and our trade deficit going for a sixer and resulting in our rupee getting further depreciated against the dollar and resulting in inflation.

Its only us poor tax payers who are praying duty will be reduced so we can buy a better car that is value for money. Then we will have another sect complaining of not getting back what they paid for on their existing motor vehicles. SIGH... Ventilating..

[isurujosh]

  DevakaC said:

I seriously would not have my hopes high on this duty reduction. Haven't we heard this waaay too many times now? Its like a wind before a storm, keeps coming before elections. What goes up stays up in this land like no other. As some of our members mentioned the leasing companies are against it, the car sale guys who already have inventory are against it and of course Maruti will be against it. Well, a reduction in duty would result in higher demand and higher tax revenue to the govt in return but the trade off will be foreign exchange cash outflows radically increasing with the new demand and our trade deficit going for a sixer and resulting in our rupee getting further depreciated against the dollar and resulting in inflation.

Its only us poor tax payers who are praying duty will be reduced so we can buy a better car that is value for money. Then we will have another sect complaining of not getting back what they paid for on their existing motor vehicles. SIGH... Ventilating..

i think the best of both worlds is to keep the rates where they are.

[da_kool_guy]

  rangerover said:

Guys,

I heard from a very reliable source that duty prices of motor vehicles would be reduced from the 280% odd to 180% (for petrol) odd by the budget this April or may. Im not sure what all categories are and or whether the reduction would be staggered. But what i was told is that it will be reduced to rates that exsisted during 2006/2007

How do you think this will affect the exsisting car market of second hand cars and unregistered cars already imported and idle at sales.?

Would the effects of such a reduction be immediately felt for prospective buyers and sellers?

Wonder how leasing companies would react

yeee im happy if its a first hand info

[xXx]

  isurujosh said:

the trade deficit has reduced quite significantly. isn't that a good start? we cannot expect "ideal" market economic meaures from this government.

Yes the gap has indeed narrowed but it is not entierly due to the adopted economic policies. end of the war and the poor economic conditions in 2008/09 played a key role according to my view.

  rangerover said:

I guess, the leasing companies are worried because, customers would default payments. I mean if duty prices come down significantly, who would want to pay the same lease rental for a car that is may be valued 25% cheaper

Worst part is for people who spent 7 - 8 million on a new toyota to suddently realise that their cars are now valued 2 million cheaper. Talk about devaluation.

very good point. didn't see it that way till you pointe out. yup a drastic reduction in import duty will put the local leasing companies in a situation US morgage lenders faced during the hight of the credit crunch.

  isurujosh said:

i think the best of both worlds is to keep the rates where they are.

why do i get the feeling you'd think otherwise if you are still on the hunt for a car....

[isurujosh]

  xXx said:

why do i get the feeling you'd think otherwise if you are still on the hunt for a car....

why do i get the feeling that i'd agree with you?

[NFS]

  isurujosh said:

why do i get the feeling that i'd agree with you?

Hi Pals, how sure r u'll of the tax reduction? Actually the car prices have gone up a bit after the presidential elections. I am not sure if it would happen again after this April election as well.

One thing to note is that none of the car sales (except for one or two) have brought done any new vehicles in the recent past probably based on some insider information. All car sales are dealing with registered vehicles these days which is one reason for the registered vehicles prices to be high. But do you think this could be a permanent thing?

Even if taxes are reduced do you think the registered vehicle owners would be willing to sell. It might take couple of months to normalize i guess.

[rangerover]

  NFS said:

Hi Pals, how sure r u'll of the tax reduction? Actually the car prices have gone up a bit after the presidential elections. I am not sure if it would happen again after this April election as well.

One thing to note is that none of the car sales (except for one or two) have brought done any new vehicles in the recent past probably based on some insider information. All car sales are dealing with registered vehicles these days which is one reason for the registered vehicles prices to be high. But do you think this could be a permanent thing?

Even if taxes are reduced do you think the registered vehicle owners would be willing to sell. It might take couple of months to normalize i guess.

I agree, i have even seen 2003/04 model allions for sale unregistered!

[harshansenadhir]

  NFS said:

Hi Pals, how sure r u'll of the tax reduction? Actually the car prices have gone up a bit after the presidential elections. I am not sure if it would happen again after this April election as well.

One thing to note is that none of the car sales (except for one or two) have brought done any new vehicles in the recent past probably based on some insider information. All car sales are dealing with registered vehicles these days which is one reason for the registered vehicles prices to be high. But do you think this could be a permanent thing?

Even if taxes are reduced do you think the registered vehicle owners would be willing to sell. It might take couple of months to normalize i guess.

good observations there, but if the taxes get reduced, definetely owners of registered vehicles have to response to the market trends, because when there's an unreg for lesser/closer price tag, whom would want to buy a registered one? keep in mind that this is a market where a 302- car with better features has a lower market value than the lesser equipped GA- plate car of the same model. Therefore price of the unreg vehicle is the deciding factor of the registered vehicles.

Remember the market drop with the huge influx of duty free vehicles into the market? Same will apply if there's a tax concession no matter we like it or not.

[RACERSEDGE]

mmmmmmmmmm another asian wonder ( asiawe ashcharyak..)

[xXx]

  NFS said:

Hi Pals, how sure r u'll of the tax reduction? Actually the car prices have gone up a bit after the presidential elections. I am not sure if it would happen again after this April election as well.

One thing to note is that none of the car sales (except for one or two) have brought done any new vehicles in the recent past probably based on some insider information. All car sales are dealing with registered vehicles these days which is one reason for the registered vehicles prices to be high. But do you think this could be a permanent thing?

Even if taxes are reduced do you think the registered vehicle owners would be willing to sell. It might take couple of months to normalize i guess.

reduction in unreg imports are not due to any inside info. numbers just doesn’t add up. cheapest decent sedan from a leading brand you can get is the honda city from singa. even that cost close to 3 mil. unreg car's are so absurdly expensive people simply can't afford them. and to make things worst exchange rate is at rs1.3 and bank interest rates are close to 20%. when you add all that up there's not much of a return for the amount spend by the importers.

if taxes come down there will definitely be a drop in used car prices this won’t happen overnight though will take atleast couple of weeks.