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Duty Hike on SBKs - It's effects

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  • Duty Hike on SBKs - It's effects

    Mr. Michael Perschke, Head, Audi India -


    Increase in Custom Duty for imported cars and Excise Duty on SUVs is very surprising. It will severely impact the auto industry and its growth. We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer. Overall it will have an adverse impact on automobile industry which is already going through a slowdown and specifically affect demand including that of SUVs.
    Currently, the industry is facing pressure from a number of factors like increasing fuel prices, high input costs, persistent inflation, high interest rates; the increase in excise and customs duty will be a dampener. The government should have looked at extending support to auto industry, which has been contributing, significantly to the GDP and could have formed a strategic pillar of industrial development.
    Quite an interesting comment made by the Audi head. So the entire brunt of the taxes are going to be handed over on to the consumers platter! Even if companies do start-up operations in India in the long run, in the short run those who want to buy a superbike/car are going to have shell out a premium.

    Atul Gupta, VP Sales and Marketing, SMIPL -

    As of now, we will not increase the price of Suzuki superbikes
    Suzuki is not going to increase the prices of their SBKs in the immediate future. They will absorb the increase in costs. Neither does the company effect much change on their demand due to the increase in duties. But the VP also leaves it as an open statement, that the prices may increase in due course of time, when nobody is looking!!

    If both the comments are taken together, it makes for even more interesting reading, manufacturers are not so upset about the increase in Import Duties as the excise duty increase for SUVs.



    If you were planning to buy an SBK today, would you delay or cancel your purchase because of the 15% increase in duty?
    85
    Yes, I would continue with the purchase
    42.35%
    36
    No, I would delay purchase
    38.82%
    33
    No, I would cancel purchase
    18.82%
    16
    Last edited by The Monk; 03-01-2013, 03:12 PM.
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  • #2
    The passion lives on, so cancelling is not an option for me.

    And since i'm not as rich as Mr. FM will have you believe, i'll keep waiting and saving up till i can afford one.

    Seriously, why do they not consider the fact that 60% of the "luxury" bikes are bought on loan, so the people buying them aren't just the super rich. If i buy a 10L bike, it is entirely possible that i am (only) as rich as a person buying a Honda City (which is a lot of people), why not impose similar "luxury" taxes on them as well then? (I'm not suggesting that they do so, instead i mean bikers should not be taxed for buying an automobile of the same value but lesser wheels).

    CBU Import of bikes under 800cc is still banned, as far as i understand, so i don't see this move "igniting" the 400-600cc segment in the medium term.
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    • #3
      Good for current legal superbike owners, bad for the ones who were about to go for their dream. Setting up manufacturing units in India is a headache due to the red tape. Everything is a headache in this country it seems when it comes to running something like this. No wonder all this 'business and investment' is going to countries like Thailand (Ducati factory) and Malaysia (Kawasaki). God save this country.
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      • #4
        I guess the definition of 'luxury' shall always have an 'agricultural' reference point here since this country lives primarily in its villages. And of late governance has been reduced to mere political opportunism. So the taxing of these high capacity motorcycles is an assertion of the government clout, more of a political statement than a fiscal control decision or a well thought out policy move meant to elicit a certain positive outcome from the industry. It is a decision taken without the fear of ruffling substantial voting feathers because the affected are so few in number.

        Political analysis apart, high end motorcycles still carry the status of a pariah at best for the powers that be, an aberration of the mobility theme, a desirable outcast but not by far perceived as a part of the mainstream motorcycling scene. A low tax collection niche further heightens this indifference and an election year budget with its severe political constraints about taxing other avenues ratchets up the indifference to contempt. I agree entirely with it being termed as a 'Robin Hood' approach though the altruism of the generous bandit is merely a thin sugar crust, a stage performance. The revenues generated will not give even a slight positive nudge to the total tax collection but 'taxing the rich' has a glamour that even our movies have been exploiting for hard cash since eons. In this case the 'hard cash' is populism.

        The eventual sales figures, in my assessment, will not see a very pronounced downward trend though many a potential upgrader stands disillusioned. 15% is not really 'taxing' for the 'rich'. The last couple of years have brought lots of visibility to performance motorcycling. People like Keith Code are becoming common knowledge, the BIC has brought local visions of extreme performance machinery, riding gear that was an expensive 'import' is almost within reach and brands like KTM are first relation kin to locals like Bajaj. The big ones were never so approachable as now and this 15% hike in taxes hurts in proportion to the heightened possibilities of ownership. The appetite had just increased when the food bill was suddenly hiked. It is the genuine aspirant, the dreamer since teens and the starry-eyed wannabe who gets hurt the most.

        What the future holds is open to conjecture. The best that can happen is a prod to the undeveloped 400-600cc segment with the big names setting up production facilities to duck under the tax window. But pragmatism forces the view of a prevalent status quo with the likes of Suzuki off-setting the load for the customer and so probably helping their sales charts get healthier. Others might, just might follow the same trend. 2014 will in all probability bring in a decision in this regard that will reflect some fiscal wisdom or lack of it. 2013 shall remain the year of scorned aspiring super-bikers, scorned by the contempt of indifference.
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        • #5
          Nobody buys a CBU superbike/hyperbike for street use *out of necessity*. You can easily make do with something smaller which is not CBU. Whether you agree or not, it IS a luxury to be able to own a CBU motorcycle. The necessity for one only arises if you are, say, a track racer. And then in that case, you don't need to pay the duty since then you won't need to do its registration or pay road tax on it as it is sports equipment, not a road bike. Even if you buy the bike on loan, you do it because you can afford the loan, the maintenance, the insurance, the expensive riding gear and the higher petrol money (compared to a smaller bike or even a Diesel Sedan). You wouldn't buy one if you couldn't afford it. You could've chosen to spend the money on a holiday in Europe but felt that a Superbike for daily use would be more *fun*.

          I know it feels bad that our dream ride has gone that bit further away but we have to look at the bigger picture. Its not like there is no potential on the CKD front. Harley Davidson is already reaping the benefits of setting up local assembly for CKD. Honda / Yamaha / Suzuki already have existing plants where they make their small capacity bikes so its not like they don't have the resources to do it. Harley didn't even have this luxury when they came in. Kawasaki could have taken a similar strategy and given us the 10R instead of the Ninja 250R but they preferred to take India more seriously than the other 3 and gave us a CKD motorcycle instead.

          If the motorcycle manufacturers like BMW, Ducati and Aprilia don't even have to make an effort to sell here, who is stopping them from shutting shop and leaving 100s of owners without any kind of service or spares support? It is all for the greater good. India is a big market for anything you may want to sell it here. A population of 1.2 billion give us this *arm twisting* power forcing even luxury car manufacturers to set up local assembly. Maybe this hike will get Honda / Yamaha / Suzuki to rethink their CBU strategy and get them to offer more of their international models as CKDs effectively *reducing* prices and improving spares availability for existing owners. And if such a thing happens, I can definitely say that most of us will conveniently forget to thank the govt. who *arm-twisted* them into making them setup the local assembly facility in the first place.
          Last edited by antz.bin; 03-01-2013, 11:57 PM.
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          • #6
            Originally posted by antz.bin View Post
            And if such a thing happens, I can definitely say that most of us will conveniently forget to thank the govt. who *arm-twisted* them into making them setup the local assembly facility in the first place.
            you made me think ...............

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            • #7
              I for one support this move by the government to increase the import duties. Manufacturers should understand that India can and should be used as a production base rather than just a market. If they begin to manufacture bigger bikes as CKD rather than CBU, I'm sure they will attract a lot more customers than they had before. Even though the price maybe reduced, the no. of sales will be significantly higher to absorb such losses. Kawasaki and KTM have a good lead over the others in this regard. Others should learn from them.
              Originally posted by Sunny View Post
              Setting up manufacturing units in India is a headache due to the red tape.
              Problems like these arise mostly due to the State governments. Companies should choose carefully where they setup their base. Not all states would be against setting up of a manufacturing unit.
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              • #8
                With this duty hike it doesn't effect me, as i for one have thought that after 5 years i will buy a SBK, but if this is the way import duties are increased, and not only on bike, but every item cost is increasing, be it from needle to any item, just think about anything that you use in your life and every item price have increased because of politics.So that five years dream, i know now doesn't exist as i for one will not be able to afford now as not only this duty hike on bikes but every thing price hikes has forced me to think about my daily living than a superbike.So sorry guys for interrupting here but this is the true fact because, for guys like us who think of buying a super-bike after n years it is still not possible. Sad but true, but had already stopped dreaming about superbike as broken dreams hurt the most and so rather stop dreaming.Once again sorry as i took space on this thread and let my feelings out because after seeing 2 times hike in petrol prices within 20 days and also this import duty hike and already spiraling price of essential commodities, i couldn't hold back my emotions.
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                • #9
                  Originally posted by Ezilkannan View Post
                  I for one support this move by the government to increase the import duties. Manufacturers should understand that India can and should be used as a production base rather than just a market. If they begin to manufacture bigger bikes as CKD rather than CBU, I'm sure they will attract a lot more customers than they had before. Even though the price maybe reduced, the no. of sales will be significantly higher to absorb such losses. Kawasaki and KTM have a good lead over the others in this regard. Others should learn from them.
                  Problems like these arise mostly due to the State governments. Companies should choose carefully where they setup their base. Not all states would be against setting up of a manufacturing unit.
                  When I look at photos like these:

                  Click image for larger version

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                  and read the related news here The life and line blog: Malaysian Prime Minister on a Chopper Bike, I know that the day our politicians and the people running the country think of activities like WSBKs, 'big bikes' etc as markers of development of a country, that is the day I would have my hope reignited.

                  All these things contribute to the sorry conditions of our racers as well. In fact 'Billion Rising' is a mega scam propaganda. It is more like 'Billion Trampled'. Sad. Very Sad.
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                  • #10
                    Originally posted by antz.bin View Post
                    India is a big market for anything you may want to sell it here. A population of 1.2 billion give us this *arm twisting* power forcing even luxury car manufacturers to set up local assembly. Maybe this hike will get Honda / Yamaha / Suzuki to rethink their CBU strategy and get them to offer more of their international models as CKDs effectively *reducing* prices and improving spares availability for existing owners. And if such a thing happens, I can definitely say that most of us will conveniently forget to thank the govt. who *arm-twisted* them into making them setup the local assembly facility in the first place.
                    If we are pissed at CBU's being more expensive, and we say "we are saving up for a Sbk", we're obviously looking at the 800cc to litre class segment, and nothing below it. Right?
                    And, I totally agree with everything in your post, right upto the "most of us will conveniently forget to thank the government".

                    However, even CKD setup has its own set of import duties. And they're no small either, when we consider that everything adds to ex-showroom price and then, to make it "on road", everything added earlier as import duty, is multiplied on... 10% in CKD duties and the on road price increases by around 15-25%, modestly speaking.

                    And a Litre class Superbike coming in as a CKD will still take 2 or more years I guess. That's 2 more budgets presented by the Men (-talists) in White.

                    And by the time a company makes a good sports oriented bike under CKD scheme, even CKD's duties will go up. So maybe one day you'll get a R1 as CKD in 15 lacs, while CBU's will cost around 21 Lacs. What a nice deal?
                    Talking about savings, your saved money will earn you interest, and inflation will go up too, but will we ever reach a point this way, where the price meets your saving? And what about the running costs after that? You do have a life and life's requirements other than your bike, right? Wife & kids? a house apart from your parental house?

                    Ultimately, most of the litre class seekers (the money savers) may end up getting themselves a Daytona 675, probably because that will come first, and with a price tag intended to capture the market.

                    CONCLUSION: If we have to get a Daytona only, why are we even discussing a 15% CBU increase which hardly matters to most of us?
                    Last edited by Samarth 619; 03-03-2013, 03:15 AM.
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                    • #11
                      Originally posted by Sunny View Post
                      Good for current legal superbike owners, bad for the ones who were about to go for their dream. Setting up manufacturing units in India is a headache due to the red tape. Everything is a headache in this country it seems when it comes to running something like this. No wonder all this 'business and investment' is going to countries like Thailand (Ducati factory) and Malaysia (Kawasaki). God save this country.
                      well said sunny bhai - Dreaming for more than 10 years to own one superbike but still dreaming as the price is going up !
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                      • #12
                        this is all mind games and nothing much, the situation will not change much, status quo. thats it. those who have moeny for a SBK, will continue to purchase it (only a very small fraction of future buyers will actually cancel their purchase), neither this move will discourage the bike manufacturers to do business here nor it will encourage them to set up an assembling plant here, coz volumes are too low for SBK's.
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                        • #13
                          Originally posted by princesirohi View Post
                          this is all mind games and nothing much, the situation will not change much, status quo. thats it. those who have moeny for a SBK, will continue to purchase it (only a very small fraction of future buyers will actually cancel their purchase), neither this move will discourage the bike manufacturers to do business here nor it will encourage them to set up an assembling plant here, coz volumes are too low for SBK's.
                          You are quite right there.if one has to purchase SBK he will go for it no matter what!..yesterday,Sunday morning i was out on my ZMA for some freash air & watched a man in my colony was riding a HD Iron 883 Motorbike..

                          Personally i support this hike on Imports by P chidamburam
                          Also i would like to mention that surprisingly, Suzuki India has more superbikes to offer then small bikes in India...http://www.suzukimotorcycle.co.in/su...e-listing.aspx
                          Last edited by Satyamzma; 03-04-2013, 11:21 AM.
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                          • #14
                            Given the increase, if all manufacturers raise prices, most >800cc models would be in the higher range of 17-20 lacs compared to the already 13-16 range that they are in presently. All this in my mind would end up boosting two very distinct markets for the litre and above class beauties –

                            1. The lower priced but riskier grey market route: The demand for SBKs has only been on the rise and the huge psychological difference between a sub-10 or closer to 10 bike vs. a >15 lac bike will prompt a lot more youngsters to jump into the grey bandwagon.
                            2. Market for secondhand models: Given the novelty of a litre class SBK we already know that pricing is a very relative term. But with the increasing difference between costs of older and newer models, I am expecting the demand curve in this market to rise. As the supply is already fixed, I am assuming that the prices are going to get higher as well.


                            This is just my hypothesis on the end result. I am sure that the bigger boost will be for the 600cc bikes and Harley Davidson in the interim
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                            • #15
                              May be Mr. PC .. heard the revv of a litre class and got scared. Probably thinks sub 800cc isnt gonna bite.

                              ^ That was a bit immature fun and dig at PC.

                              Ok now seriously, what if Agusta F3 were to come to India... its a 675, but is pricer than most litre classes or 600-800 ranges.
                              So, he's essentially saying he's okay with people paying more for less power than people who are trying to get a proper bang for the hard earned buck.


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