2% Increase in Car Price likely after 2011 Budget

Auto Industry

Car prices after the budget is announced in Fed 2011 might go higher. The reason for the hike maybe the expected 2% increase in the excise duties on the small car for the second time in a row as it did last year in 2010 Indian budget. As during the recession the year 2008-09 globally, Indian Govt. implemented a cut on the excise duty from 12% to 8%. Last year in 2010 budget, the rate had been revised upward to 10%. Rumours are that this year in 2011, the rates may further be increased by 2% bringing it to 12% as it was before the economic crisis. This increase in excise duty will hit the automobile market sales adversely, especially the small car segment buyers who are most sensitive to the cost. Nothing is official as of now, but the chances are high that it will be revised upwards. Lets keep our fingers crossed and wait until the official budget speech by the Finance Minister of India.