Thanks to the higher taxes announced in this year’s budget, and rising diesel prices, the bullrun for utility vehicles (UVs) in India is well and truly over. And the direct gainers have been sedans, whose sales have sprinted ahead in the first half of 2013-14.
Largely on the back of compact sedans such as Maruti Dzire and the recently launched Honda Amaze, sales of sedans have grown 10% in the first half. Utility vehicle, on the other hand, saw sales decline by 5.4% --- for the first time in five years.
In the first half of 2012-13, UV sales grew by 53.2%, and sedans by just 7.3%.
“The 3% additional duties on UVs in this year’s budget and the rising diesel prices have robbed the segment of its momentum from last year,” said Mayank Pareek, chief operating officer (marketing and sales), Maruti Suzuki India Ltd. “Among sedans not every brand is growing. It is only the Dzire and the Amaze that are bringing in bulk of the volumes.”
“The 3% hike in duty has destroyed the level playing field… some of the best selling utility vehicles competing in the same price bracket do not come under the increased duty structure due to the new specifications,” said Pawan Goenka, executive director, M&M. “It totally changes the competitive scenario.”
The government had increased excise duty on UVs above 4-metre length, 1500cc engine along with 170mm ground clearance to 30%, from 27% earlier.
“The three priorities for the Indian consumer is status, space and fuel economy,” said Jnaneswar Sen, senior vice president, Honda Cars India. “The Amaze ticks all the boxes. Even after six months demand, is still high with a waiting period of almost two and a half months.”