BUDGET EXPECTATIONS

AUTO SECTOR

 Car sales in India grew 13.11 per cent to 2,11,402 units in February as customers rushed to buy vehicles fearing rise in prices post the Union Budget, to be presented this week.

"People are expecting increase in car prices after the Budget as the government may roll back two per cent excise concession given as stimulus during the 2008-9 slowdown," SIAM Director General Vishnu Mathur .

 During February, the country's largest car maker Maruti Suzuki India sold 94,118 vehicles, a jump of 7.13 per cent, over the same period last year. Rival Hyundai Motor India's sales grew by 12.78 per cent to 36,658 units, while Tata Motors' sales increased by 5.46 per cent to 28,236 units.

 According to SIAM, total two-wheeler sales in February 2012 increased by 11.96 per cent to 11,44,500 units, from 10,22,226 units in the same period of previous year. Motorcycle sales in the country during the month grew by 8.01 per cent to 8,38,193 units, from 7,76,005 units in the same month last year.

 Market leader Hero MotoCorp witnessed a growth of 9.55 per cent at 4,70,994 units compared to the same month a year ago, SIAM said. Rival Bajaj Auto's sales decreased marginally by 0.59 per cent to 2,03,919 units from the same month last year.

 As the government gets ready with the Budget for 2012-13, there has been speculation that higher taxes could be imposed on diesel passenger vehicles as the subsidised fuel has been diverted for personal use by the affluent. Apprehending imposition of higher tax on diesel vehicles, automobile industry body SIAM has said such a move will "stigmatise" diesel technology which will be very unfair to the sector.

 "There is a fear in the auto industry that some ad hoc tax may be levied on diesel vehicles. If that is done it will stigmatise the diesel technology which will be very unfair to the industry," Society of Indian Automobile Manufacturers (SIAM) Senior Director Sugato Sen said. In an earlier recommendation by Kirit Parikh Committee, it has been suggested that an additional excise duty of Rs 80,000 be imposed on diesel cars to discourage more diesel being diverted for personal auto segment.

 Sen, however, refuted that it was wrong to assume that a large portion of diesel has been consumed by passenger vehicles. Citing a study done by SIAM, he said that out of a total of 61.68 million tonnes of diesel consumed in India across various sectors during 2010-11, diesel personal cars consumed only 1.03 per cent, while for diesel taxi segment it was at 1.82 per cent.

 Jeeps used for personal purpose accounted for 0.53 per cent and the same category of vehicle used for commercial purpose consumed 3.44 per cent, Sen added. Due to the big price difference between diesel and petrol, he said the demand for diesel passenger cars has increased over the years.

 In Delhi, petrol costs Rs 65.64 a litre, while diesel costs just 40.91 per litre that has a subsidy of Rs 14.11. In 2010-11, out of a total of 21,60,153 passenger cars sold in the country, 28.42 per cent was diesel, while that of petrol was 71.58 per cent. In 2007-08, diesel cars accounted for only 21.4 per cent and petrol 78.6 per cent of a total of 12,17,597 units.

Sen said instead of singling out diesel vehicles, "diesel fuel price should be made market driven".