Automakers such as Mahindra and Mahindra, Toyota Kirloskar Motor, Audi, Mercedes-Benz and JlR India are planning to pass on the increased cess on mid-sized and large cars along with SUVs, after the GST Council's decision to raise it by up to 7 per cent. The companies said the constant changes in rates could lead to market instability and affect demand growth trends, expressing disappointment that the Council's decision ‘totally verlooked’ their contribution to the industry and the economy.
“Following the ordinance on the GST amendment, we note the increase in the cess from 2-7 per cent on mid-, large- sized cars and SUVs. We see the prices of our products going up proportionately, which may nearly reflect the pre-GST scenario... However, we are ascertaining the real price impact on our models, given the cess hike,” Toyota Kirloskar Motor Vice-Chairman and Whole-time Director Shekar Viswanathan said in a statement. “These constant changes could lead to market instability and thus dampen the spirits of the industry across the entire value chain,” Viswanathan added. Mahindra and Mahindra MD Pawan Goenka said: “We are awaiting the exact definition of the categories. Whatever is the impact of the increased cess will reflect in the revised pricing from the effective date.” He further said: “We are grateful that the Council has very thoughtfully not raised the cess to the maximum level that had been enabled by the ordinance.” The Council has basically restored pre-GST relative excise duty differentials between the various categories of vehicles. The hybrid vehicle cess has not been increased, effectively giving these vehicles a 2-7 per cent cess relief, he added. According to BMW Group India President Vikram Pawah, while the company welcomes the implementation of the GST in India, immediate changes and increase of motor vehicles cess adversely affect stability and growth of the automotive industry in India.