India is the world's second largest market for two wheelers after China. However, India's passenger car and utility vehicle industry is small by international standards due to low purchasing power of the population.
The industry is one of the key sectors of the economy in terms of the employment generation.
It directly employs close to around 0.2 million people and indirectly employs around 10 million people.
Good volume growth and cost savings in the current fiscal are expected to lead to improvement in operating profits for most of the companies in the sector.
The passenger car segment is expected to see increased activity next fiscal, with many players planning new launches in order to satisfy Indian customers. For instance, DaimlerChrysler India is planning to launch its M Class four-wheel drive as well as sport segment offerings - SLK and CLK - in the country in the first half of 2002. Japanese auto major Toyota is also planning to launch Camry in India in 2002.
Sales Statistics
Sales
(Domestic+Exports)
Apr 01-Jan
02
Apr 00- Jan
01
Change
Passenger
Cars
489,615
477,242
2.6%
Multi-Utility
Vehicles
100,347
98,077
2.3%
M&HCVs
67,702
65,853
2.8%
LCVs
42,031
49,187
-14.5%
Three
Wheelers
175,736
170,684
3.0%
Scooters
751,705
753,342
-0.2%
Motorcycles
2,379,583
1,767,977
34.6%
Mopeds
413,822
585,128
-29.3%
Source: Society of Indian Automobile
Manufacturers
Duty Structure
Products
Excise
Customs
(Basic)
2000-01
2001-02
2000-01
2001-02
Two Wheelers
(<75cc)
16%
16%
35%
60%
Two Wheelers
(>75cc)
24%
16%
35%
60%
Motor Vehicle (<=6
seater excluding driver)
40%
32%
35%
60%
Motor Vehicle (10-12
seater excluding driver)
32%
32%
35%
35%
Motor Vehicle (13 seater
and above)
16%
16%
35%
35%
Commercial Vehicle -
Petrol driven
40%
32%
35%
35%
Commercial Vehicle
(other than petrol driven)
16%
16%
35%
35%
Secondhand Motor
Cars
NA
NA
35%
105%
Secondhand motor cycles
<= 75 CC
NA
NA
35%
105%
Secondhand motor cycles
> 75 CC
NA
NA
35%
105%
Tractors
(<1800cc)
16%
16%
35%
35%
Tractors (>
1800cc)
16%
16%
35%
35%
Major announcements in previous year's budget
Special Excise Duty (SED) of 8% on scooters and motorcycles was abolished.
Subsequent to the collapsing of three SED rates to a single rate of 16%, the SED on cars was reduced to 16%.
Basic customs duty on used cars & motor cycles and old multi-utility vehicles was raised to 105%.
Industry's demands from Union Budget 2002-03
Some of the major demands made by industry associations like Society of Indian Automobile Manufacturers (SIAM) and Confederation of Indian Industry (CII) are as follows:
Value Added Tax (VAT) should be implemented in a manner that will eliminate the cascading effects of taxation.
Excise duty on vehicles with a seating capacity of up to 8 persons, excluding the driver, should be reduced to 16%. If the Government is not in a position to bring down the rate to 16% in one go, it should reduce it to at least 24% from the present level of 32%.
For vehicles with a seating capacity of 9 -12 persons, excluding the driver, excise duty should be reduced from 32% to 16%.
Customs duty on components (imports in any form other than CBU) should be reduced to 30% from the current level of 35%.
Customs duty concession of 5% on CNG kits/ parts of kits should be extended to raw materials required for manufacture of CNG kits and its parts.
To encourage the use of pollution free electrical vehicles, customs duty on their major inputs should be reduced to 5%.
Key Players Ashok Leyland, Bajaj Auto, Bajaj Tempo, Daewoo Motors, Eicher Motors, Escorts Yamaha Motors, Fiat India, Ford India, General Motors India, Hero Honda Motors, Honda Siel Cars, Hindustan Motors, Hyundai Motors India, Kinetic Motor, LML, Mahindra & Mahindra, Maruti Udyog, TELCO and TVS Suzuki.
