Mahindra to hike car prices by up to Rs 47,000 from April 1

Mumbai: Auto major Mahindra & Mahindra announced an increase in prices of its passenger vehicles by Rs 5,500 to Rs 47,000, effective April 1, to offset excise duty hike in Budget 2016-17.

Prices of recently launched KUV100, however, have been hiked with immediate effect.

"Though the 1-4 per cent duty hikes are already effective, we have decided to pass on the price increases only from April 1. Prospective customers can still avail of our various passenger cars at the pre-Budget prices all through March.

"In absolute terms, prices will go up by Rs 5,500 to Rs 47,000, depending on the model and prevailing prices," Mahindra Chief Executive for passenger car business, Praveen Shah told PTI here today.

He, however, added that KUV100, launched mid-January will attract new prices with immediate effect. While the petrol model will be costlier by 1 per cent, the diesel model will be dearer by 2.5 per cent.

Following the Budget proposal to increase excise duty to the tune of 1-4 per cent and an additional cess, almost all the automakers led by market leader Maruti have increased retail prices to pass on the duty increases and protect bottomlines.

While Maruti Suzuki India hiked car prices by up to Rs 34,494 to offset impact of infrastructure cess, Hyundai, Tata Motors, Toyota, Honda Cars, Mercedes-Benz, GM India, BWM, Renault, Nissan, Honda, and Skoda among others have also announced price hikes depending on their ex-showroom prices in each state.

Their new prices vary from Rs 2,000 (Tata Motors) to Rs 5 lakh (Merc). Merc and Skoda had increased the prices in January as well.

When asked about the customer response to KUV100, Shah said it has been very good forcing the company to ramp up production by an additional 3,000 units.

The decision to increase output comes as there is a 8-10 weeks waiting period for the new car as the company has 27,000 pending orders.

The company has a combined 9,000 capacity for XUV500 and KUV100 models at the Chakan plant and the proposed new capacity will only be for KUV100, Shah said.

When specifically asked about the petrol model of KUV100, he said it has been beyond their expectation as the demand is almost 50:50 for both the variants.

On TUV300 launched last September, he said, it is notching up around 3,500 units a month.

When asked whether the company, which has been continuously reporting falling sales, expect last month, is out of the woods, having made some success with the new models, Shah parried a direct answer, saying except for the duty hike in the Budget, which is a big challenge, the Budget is good with its focus on infrastructure development.

"The new duty structure is too complicated and once a new duty is imposed it remains forever in our country. So is the case with cess. So for us, we are keenly awaiting the rollout of GST. However, I welcome the Budget for other things," Shah said.

It can be recalled the Budget has imposed a complicated duty hike on auto companies with a 2.5 per cent cess on diesel vehicles of length not exceeding 4 meters and engine capacity not exceeding 1,500 cc, and 4 per cent on higher engine capacity and SUVs and bigger sedans.

That apart there is a 1 per cent hike on petrol/LPG/CNG driven vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,200 cc.