FSMNews

Toyota Kirloskar Motor (TKM), a subsidiary of the Japanese automaker in India, announced on Wednesday that it has raised its prices for its key models in response to the Goods and Services Tax (GST) Council’s decision to hike cess on vehicles.

TKM director and senior vice president of marketing and sales N. Raja stated that they needed to revise the price of their products in line with the cess hike which may nearly reflect the prices pre-GST state.

In agreement with the council’s decision, TKM has increased the price of selected models, including the Innova Crysta now at ₹78,000 ($1,219.14), while the SUV Fortuner will be more costly by up to ₹160,000 ($2,500.80).

The Corolla Altis will be adjusted to ₹72,000 ($1,125.36) and the Etios Platinum advanced by ₹13,000 ($203.19).

Price of hybrids and small cars, such as Etios Liva, and Etios Cross were unchanged following the cess hike.    

Back in August, the company encountered a minor fall in sales as it only sold a total of 12,017 vehicles that month compared to 12,801 units sold in the same period a year earlier.

TKM claimed that it saw its customer orders climbed by 40 to 50 percent after the announcement of a possible cess hike.

GST Cess Hike

FSMNews

The GST council decided on September 9 to hike cess on vehicles so as to bring tax rates on automobiles at pre-GST levels.  

The move comes after prices for cars were going down by up to ₹300,000 ($4,689) since the tax rates set by GST in July was lower than the combined central and state taxes pre-GST days.

The price of Innova at that time was lowered by almost ₹100,000 ($1,563), while the Fortuner was more affordable by ₹200,000 ($3,126). Corolla Altis reduced to ₹98,000 ($1,531.74) and the Etios lessened by ₹24,500 ($382.94).   

To resolve this problem, the council decided to levy the cess. Under the latest terms, rates for mid-sized automobiles will be raised by 2 percent, while 5 percent will be hiked on luxury models, and sport utility vehicles (SUVs) will have 7 percent.

The effective council rate on mid-size cars is at 45 percent, while the larger ones will be 48 percent. Rates for SUVs will be 50 percent, including cars with length exceeding 4,000 millimeters (mm) and having ground clearance of 170mm and above.

Finance Minister Arun Jaitley said that the cess has been increased for large autos where the affordability of consumers is high, adding that the pre-GST rate is not yet restored and even though they have room for raising cess by 10 percent, they hiked it up to 7 percent.

Cess on small petrol and diesel vehicles, hybrids as well as those able to accommodate up to 13 passengers has not been changed.

However, some companies have expressed their disappointment towards GST, saying that the council’s decision completely forgot their role within the industry and the economy.

They also feared that the recent changes might bring about market instability and affect demand growth movements. GST’s cess hike took effect on Monday.

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