Saturday, October 20, 2007

small car, big trouble?


Tata Motors has announced that it will roll out it's Rs. 1 lakh car (around USD 2500) in 2008. Other car makers may step in that price segment as well.

Do we need a car in this price segment?

... taking in to account, congestion, pollution, dependence on oil, travel needs, alternate public transport mechanisms, safety standards etc.

A related article from Down to Earth is here.

2 comments:

Neeraj Krishnan said...

The first thing thats striking is that taxes on a 140,000 automobile are 76,000! I tried looking for how that amount comes about (and its not easy to find :) ). Here is one link
http://www.livemint.com/2007/08/07092138/Web-Exclusive-Will-India-real.html

Looks like its made up of 40% MODVAT (modified value added tax) on components plus a 12% sales tax plus other local taxes. This excludes a road tax you have to pay before you can drive your car on the roads.

The second thing thats striking is does the automaker really need those fiscal breaks? Or subsidized land? Why do we have to finance their growth? Let them do business as everyone else does in the world. And if the state does it to encourage local economic activity, it could have spent it with far more effect if it educates its people better and keeps them in good health.

A 76,000 tax on a 140,000 automobile on consumers so that you can then use to subsidize a giant automaker!

And finally, the question "Do we need a car in this price segment?" will be answered by consumers. They will decide if the safety and comfort bargains are worth making (if there are significant bargains to be made that is). After discovering this tax structure, personally I will never pay 50,000 in taxes to the government for a 50,000 car! Would you?

Anon Coward said...

Do we need a car in this price segment? Sure, why not .. with sure fire low installment loans every bike riding Evil Kneval will now have 2 more wheels at their disposal!