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Special tax on diesel cars may increase prices by Rs 2.55 lakh

Discussion in 'Non FIAT Cars and two wheelers' started by ramjn, Jun 13, 2012.

  1. Loki

    Loki

    Messages:
    45
    Im not sure Dual pricing of diesel can be enforced 100% (or even 60%) in a country like India. Corruption will kill the entire initiative and will render it meaningless. Its pretty obvious that a whole new market will exist - that of people buying diesel for their commercial vehicles - but later selling them to passenger car owners and making some profit !

    A close example would be the case of LPG cylinders. The red ones which we use at our houses are meant strictly for domestic consumption only and hence are heavily subsidized. For commercial use (Restaurants etc), people are supposed to use Blue LPG cylinders (when was the last time you saw one??) which are not subsidized and hence more expensive. All of us know how much this has been enforced :(
    Last edited: Jun 14, 2012
    2 people like this.
  2. jumu

    jumu Superiore

    Messages:
    969
    Chennai
    If the govt increases the tax on diesel cars, then more people will buy petrol cars and only those who can justify the usage and enjoy the pulling power of the diesel will buy diesel. That is how it should be in reality. Somewhere the govt has to draw the line to rein in this haggling issue. Just because it makes it expensive for us to buy a diesel car, we should not be opposing every move. Unless we cooperate, this country cant move forward. There may be other many issues of wrong declaration and unjust usage. If we the people are not honest , then god only save. The problem is we want everything cheap, but we have to realize that somewhere somebody is paying the difference

    The manufacturers , apart from having fears about their investment are also worried about how they will part the extra they have been enjoying all along. The difference in the cost of petrol and diesel cars is almost a lakh. Does it really cost that much extra to produce a diesel engine. I dont think so. May be a few components need a different metallurgy and hardening and different shox up front to take the extra weight all of which may not work up to a lakh of rupees.. The cos has been enjoying the premium all along. The TATA indica petrol and diesel engine are of the same block.

    Abdul
    2 people like this.
  3. sungoa2010

    sungoa2010

    Messages:
    2,878
    Goa
    The difference in price between petrol and diesel is because of other factors also. For example if we see VW they have invested lot to bring their on direct injection diesel engines( Pumpe Düse) and won't be able cope up with the refinement of common rail technology and now started producing CR tdi engines. There are lot of money is pumpe3d to produce better and better engines. I think part of the CRDI engine price is going to the royalty to Bosch. So the reason 1L difference is many fold.
  4. Arryan

    Arryan Regolare

    Messages:
    257
    Bhilai
    Linea 1.3
    I beg to differ from you, this is not the way to do it. The GOI has put itself into such a mess (administered pricing mechanism of diesel) that it is finding it difficult to get out of the mess now.
    Taking your own words, let's assume that after this increase in ED, not a single diesel car is sold in India (purely hypothetical). But the high consumption of diesel (that the petrol minister is pointing out) will still remain because of the already existing diesel cars on the road. What will the GOI do to control that ?

    The real objective is not to control the sell of diesel cars in India, but to control the huge consumption (already happening) of diesel by private car owners. The only effective way to do it is to raise the price of diesel for cars, atleast.

    There is no question of opposing every move or honesty on our part. Do you think any Indian having a diesel car is dis-honest ? The question here is of a rational (and sustainable) policy by the GOI. A country cannot be ruled by such short term and unsustainable policies.
    Last edited: Jun 14, 2012
  5. jumu

    jumu Superiore

    Messages:
    969
    Chennai

    Aaryan,

    Its like saying when the Euro 4 is introduced, what about the Euro 3 cars.? The current diesels will continue. Its the further /future consumption that the govt intends to regulate
    I am implying that the current diesel car owners are dishonest as we are only enjoying what is on offer legally

    Abdul

    ---------- Post added at 02:08 PM ---------- Previous post was at 02:01 PM ----------


    Apologies to all. It was a big TYPO It should read " I am not implying that current diesel car owners are dishonest as they are only enjoying what is on offer legally" Soall pls excuse

    Abdul
    [/QUOTE]
    1 person likes this.
  6. amit

    amit Superiore

    Messages:
    767
    Navi Mumbai
    You, like our government, have a very simplistic view of things. The assumption both the government & you are making is that by imposing excise duty of Rs.2 lakhs diesel car buyer will switch to petrol. In reality, this move will kill the demand for cars altogether. The buyer is not going to behave the way you expect him to. Petrol car's have become expensive to buy & run, if diesel cars are expensive by 2 lakhs, the buyer will think, ' On petrol is 75/liter, diesel cars are now 2 lakhs costlier, might as well cancel the idea to buy a car'. The government will totally kill the auto industry.

    What may happen is used diesel cars will see a spurt in demand. Those looking to buy a Swift/i20/Punto/Polo diesel will downgrade to a Wagon R/ i10 petrol.

    We are irritated because the government is using short term gimmicks to solve the problem. We are irritated because the government has created this problem and wants us to pay our way through to what they believe is a solution! If you are sold a lemon by Fiat and if they ask you to pay the full price for a replacement car would you agree to it?

    As I have put it above, this move may well kill the already weak auto demand in the country altogether. The way out is to bridge the artificially created gap between petrol & diesel.

    We are all anyway paying market rates for diesel. We don't pay when we go to the fuel station to fill up our cars, but the subsidy goes through our tax money. We are being fooled into believing that we are paying 45/liter for diesel. Just because we don't pay rs.60/liter at the fuel pump doesn't mean we aren't paying for the market price of diesel. For all you know, we are also paying for that small scale transporter who does business in cash and shows way less then what he earns while enjoying the subsidised diesel.

    Transport sector is the biggest consumer of diesel. It's also among the most dis organised sectors here. Paying market price will force transporter's to think of ways to get more efficient. Just by properly maintaining the trucks they may be able to increase fuel efficiency by at least 15%. At Rs.45/liter for diesel, they don't care about this. At Rs.60/liter they will be forced to resort to better maintainence.

    Its simple business. The government has created a diesel market here due to their idiotic pricing policies. You can't blame a private business company if they use the situation to their advantage. If you crucify the car maker's for pricing diesel cars more then crucify the government too. If a diesel car costs Rs.1.50 lakh more then it's petrol variant, then government is also making more money in the form of excise duties, VAT , road tax and what not. Using your logic, can we can say government has artificially created a diesel market to make more money through taxes?!

    By the way, abroad, diesel cars cost about USD 1000 more then petrol. This, with, diesel normally being about USD 0.20 to USD 0.50 more then petrol.
    Last edited: Jun 16, 2012
  7. sungoa2010

    sungoa2010

    Messages:
    2,878
    Goa
    If government increase the price of a car it is not going to make any indifference between the government and popular leaders(pillars). This pricing strategy has only considered that. So they think this will reduce the usage of diesel and also they can subsidize diesel with that money. But government has not thought about the weakening of a industry which may have direct or indirect effect on economy. When they fix problem in one place another bubble will appear some where. What government has to do is to to restrict the usage of diesel by other efficient way . How many of the public transport vehicle are in healthy condition. They are consuming lot of fuel because of their poor maintenance. There are lot of truck owners using the old trucks. Those vehicles should not be permitted on road. If they want to do business let them buy new ones. They cannot make profit at the coast of tax payers money. This will also strengthen the truck industry. Our long distance RTC buses are running with few people. For example recently I came from Manglore to Goa in a volvo. There were hardly 10 people in the bus which can accommodate much much more than that. Think about the Fuel loss. I have chosen bus because of not getting reservation in in any class in train. Then think about the demand and failure in making use of demand. If things work efficiently and without corruption government can do away with the price hike in diesel vehicle. What is happening in india, in any policies is that the public is paid for the inefficiency of the government.
    Last edited: Jun 16, 2012
  8. jumu

    jumu Superiore

    Messages:
    969
    Chennai
    @Amit,

    Apart from this Punto, all my prievious cars were petrols. When I wanted to change my car 3 yrs ago, I looked around, found a nice Fiat , enquired the options and selected a diesel. If there was no diesel option in the punto, I would have still bought the petrol Punto.

    The difference between the price of petrol and diesel has always been 1/3rd , Rs.70/3 x 2=46. You take at any period of time this has been the difference. Rs.70/-just seems more in figures now, but earnings have also increased proportionately. Its only because there has been a tremendous advancement in diesel technology that has led to higher mileages and lower maintenance and user friendliness that there has been a shift to diesels. Once diesels become expensive, initial resistance will be there but finally a persons desire to own a car will take over and he will settle for a petrol and use it more cautiously. In course of time the Petrol engines will get a fillip in the form of better technology and give better FE and give better value for money. The diesel, if it loses market share because of this move will also try to give better valued for the money to the customer. So it will even out.

    It is always good and nice to argue.:D

    Abdul

    ---------- Post added at 07:17 AM ---------- Previous post was at 07:03 AM ----------

    @Amit,

    Apart from this Punto, all my prievious cars were petrols. When I wanted to change my car 3 yrs ago, I looked around, found a nice Fiat , enquired the options and selected a diesel. If there was no diesel option in the punto, I would have still bought the petrol Punto.

    The difference between the price of petrol and diesel has always been 1/3rd , Rs.70/3 x 2=46. You take at any period of time this has been the difference. Rs.70/-just seems more in figures now, but earnings have also increased proportionately. Its only because there has been a tremendous advancement in diesel technology that has led to higher mileages and lower maintenance and user friendliness that there has been a shift to diesels. Once diesels become expensive, initial resistance will be there but finally a persons desire to own a car will take over and he will settle for a petrol and use it more cautiously. In course of time the Petrol engines will get a fillip in the form of better technology and give better FE and give better value for money. The diesel, if it loses market share because of this move will also try to give better valued for the money to the customer. So it will even out.

    It is always good and nice to argue.:D

    Abdul
  9. Instead of increasing the price of diesel or petrol every now and then,the governemet can atleast make the rates of fuels at all the states uniform,so they will make more money from states where diesel/petrol prices are less,and that can be used for paying off the debt.
    And secondly the diesel consumed by private cars is just a fraction of indias total consumption,and quiet an insignificant figure when we are talking about thousand of crores of losses.
  10. Cinju

    Cinju Esperto

    Messages:
    1,333
    Trivandrum
    Government is learned to be finalising a two-pronged strategy to recover costs: a marginal increase in diesel prices, and a tax on diesel cars to recover the remainder of the deficit.
    Ref:- Price hike, road tax for diesel? - Hindustan Times

    Maybe after the Vice president election we can expect some new strategy.

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