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Luxury vehicle manufacturers’ disappointed over move to hike cess ceiling

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Mumbai/Chennai, Aug 7 : Luxury vehicle manufacturers on Monday expressed their disappointment over GST Council’s recommendation to the central government for a hike in maximum cess ceiling leviable on luxury, sports utility vehicles (SUVs) among others.

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The Ministry of Finance in a statement said that decision to recommend a hike in the “maximum ceiling of cess” was taken at the Council’s meeting on August 5.

“The GST Council considered the issue of cess leviable on motor vehicles in its 20th meeting held on August 5 and recommended that central government may move legislative amendments required for increase the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703 including SUVs, to 25 per cent instead of present 15 per cent,” the ministry said in a statement.

“However, the decision on when to raise the actual cess leviable on the same would be taken by the GST Council in due course,” it said.

The ministry revealed that the decision to recommend a hike in cess cap was taken after the Council noticed that post the roll-out of GST, the total tax incidence on motor vehicles had come down as compared to pre-GST regime.

On industry’s side, luxury car maker Mercedes-Benz India voiced its disappointment.

“We are highly disappointed with the decision. We believe this will be a strong deterrent to the growth of luxury cars in this country,” Roland Folger, MD and CEO, Mercedes-Benz India, was quoted as saying in a statement issued by the company.

“As a leading luxury car maker, this will also affect our future plans of expansion under ‘Make in India’ initiative, which aims at making and selling world-class products in India, with the latest technology for end-consumers,” he added.

Folger pointed out that the recommendation will reverse the positive momentum that the industry wanted to achieve with the introduction of the GST.

“With this hike in cess, we expect the volumes of the luxury industry to decelerate, thus offsetting any growth in the potential revenue generation that could have come with the estimated volume growth,” Folger said.

He also called for the need for a long-term road-map for the luxury car industry in India.

“The constant shift in policy makes our long-term planning for the market highly risky, and we think this would only have an adverse impact on the country’s financial ratings,” Folger said.

On its part, Audi India announced a sales offer on a range of models including Audi A3, Audi Q3 and Audi A4.

“Keeping in mind the proposed increase in cess, this is an opportune time to join the Audi family and additionally also benefit from the privileges of the Audi India club,” said Rahil Ansari, Head Audi India.

According to Shrikant Akolkar, Research Analyst- Automobiles, Angel Broking: “The likely hike in the cess rate from current 15 to 25 per cent is not expected to see a materially negative impact on the demand for the premium automobiles.”

“The underlying demand remains healthy which is the driving force for the automobile sector. We believe that companies will be able to pass on the cess hikes on luxury vehicles/UVs to customers by price revision.”

Further, Suresh Nandlal Rohira, Partner, Grant Thornton India LLP said: “The increase in compensation cess on luxury cars from 15 per cent to 25 per cent is purely an attempt of anomaly correction by the government on realising the revenue loss it would undergo.”

“Although, it would take away the luxury for higher segment car buyers with an additional tax burden of 10 per cent, however such frantic changes and corrections for each sector may convulse the confidence of the Industry and also lead to re-planning of their sales strategy and cost impact thereon.”

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Equity indices close higher, RIL top gainer

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SENSEX-

Mumbai, April 24: Healthy buying in oil and gas, banking and auto stocks, coupled with broadly positive global cues, lifted the key Indian equity indices on Tuesday.

Index heavyweights like Reliance Industries (RIL), Yes Bank, Adani Ports, Mahindra, Larsen and Toubro were the top gainers on the BSE.

However, heavy selling pressure in metals, IT and consumer durables stocks trimmed some gains of the benchmark indices, market observers said.

The wider Nifty50 of the National Stock Exchange (NSE) rose by 34.05 points or 0.32 per cent to provisionally close (at 3.30 p.m.) at 10,618.75 points.

The barometer 30-scrip Sensitive index (Sensex) of the BSE, which opened at 34,491.38 points, closed at 34,616.64 points — up 165.87 points or 0.48 per cent from its previous session’s close.

The Sensex touched a high of 34,706.71 points and a low of 34,465.49 points during the intra-day trade.

In contrast, the BSE market breadth remained bearish with 1,479 declines and 1,191 advances.

On Monday, the equity indices closed a volatile trade session on a flat-to-positive note as healthy quarterly results drove investors’ sentiments.

The Nifty50 closed higher by 20.65 points or 0.20 per cent at 10,584.70 points, while the Sensex closed at 34,450.77 points — up 35.19 points or 0.10 per cent.

IANS

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Xiaomi, Jio top India market

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New Delhi, April 24: Xiaomi continued to lead the Indian smartphone market with 31.1 percent market share while Reliance Jio topped the feature phone market with a massive 35.8 percent share in the first quarter of 2018, a new report has said.

Xiaomi was the leader with 25 per cent market share in Q4 of 2017.

According to Counterpoint’s “Market Monitor” service, Samsung with 26.2 per cent share was second, followed by Vivo at 5.8 per cent share in the smartphone segment.

Driven by the feature phone segment which doubled owing to strong shipments of Reliance JioPhone, India’s overall mobile phone shipments grew 48 per cent (YoY) in Q1 2018.

Honor (Huawei) entered top five smartphone brands for the first time. Honor (146 per cent), Xiaomi (134 per cent) and OnePlus (112 per cent) were the fastest growing smartphone brands.

“Q1 2018 started off with some brands sitting on inventory post the festive season in Q4 2017, which continued throughout the quarter as industry moves to a Full View display portfolio,” Karn Chauhan, Research Analyst, said in a statement.

Furthermore, the quarter was also marked with less than normal smartphone launches as very few brands refreshed their portfolio, except for Xiaomi and Samsung which benefitted from the new launches.

“However, we expect the demand to start picking up from early Q2 2018 onwards, driven by faster replacement rate of existing 2G and 3G smartphone users upgrading to 4G mobile phones,” Chauhan added.

This is the first time that the top five smartphone brands accounted for more than 70 per cent market share in a single quarter.

“Xiaomi and Samsung alone captured 58 per cent of the total smartphone market. Xiaomi’s Redmi Note 5 and 5 Pro were the most popular models for the Chinese brand, whereas Samsung Galaxy J7 NXT and J2 (2017) drove volumes for the Korean vendor,” said Anshika Jain, Research Analyst.

The performance of Chinese brands remained strong, accounting for 57 per cent of the total smartphone market in Q1 2018, up from 53 per cent during Q1 2017.

“The demand for JioPhone continued through Q1 2018 as Reliance Jio’s feature phone market share raced from 0 per cent last year to 36 per cent in Q1 2018. This demand was catalysed by the introduction of a cheaper data plan,” said Tarun Pathak, Associate Director.

China based Transsion Group (the holding group of Tecno, Itel and Infinix) has become the fifth largest player with four per cent market share in Q1 2018 (combined for all three brands).

The race for the fifth position is quite close between Lava, Micromax, Honor, Nokia (HMD) and Lenovo (+Moto) brands.

Itel is the third largest player in the feature phone segment with 17 per cent growth (YoY).

IANS

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Key equity indices provisionally end in green

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Mumbai, April 23: The key Indian equity indices provisionally closed in the green on Monday on the back of healthy buying in consumer durables, healthcare and IT stocks.

However, selling pressure on metal and fast moving consumer goods (FMCG) stocks trimmed gains in the market.

At 3.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) provisionally closed higher by 20.65 points or 0.20 per cent at 10,584.70 points.

The barometer 30-scrip Sensitive index (Sensex) of the BSE, which opened at 34,493.69 points, closed at 34,450.77 points (3.30 p.m.) — up 35.19 points or 0.10 per cent — from its previous session’s close.

The Sensex touched a high of 34,663.95 points and a low of 34,259.27 during the intra-day trade.

The BSE market breadth was bullish with 1,399 advances and 1,284 declines.

On Monday, the major gainers on the BSE were IndusInd Bank, Mahindra and Mahindra, Sun Pharma, Asian Paints and Yes Bank while HDFC Bank, Tata Motors (DVR), Coal India, Hero MotoCorp and ICICI Bank were among the major losers.

On NSE, the top gainers were IndusInd Bank, Mahindra and Mahindra and BPCL. The major losers were Hindalco Industries, Indiabulls Housing Finance and UPL.

On Friday, negative global cues such as high crude oil prices, along with a weak rupee and heavy selling pressure in banking stocks subdued the key Indian equity markets.

The Nifty50 closed at 10,564.05 points on Friday, down 1.25 points or 0.01 per cent from its previous close and the Sensex closed at 34,415.58 points, down 11.71 points or 0.03 per cent.

IANS

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