The Swedish Carmaker Volvo has increased the prices of all its current models in India by up to 5%. The move is seen as an aftereffect to the proposals made by the Finance Minister in his Union Budget announcement on Feb 1, 2018. In his Union Budget address, Mr. Arun Jaitley had proposed a 15% customs duty on imported engine components. Also, the duty on the import of vehicle parts that are an element of the CKD kits was increased to 15 percent too. This was an increase of 2.5% and 5 % respectively on the previous duty slabs. Further, a rate hike of 5% on was proposed by the Finance Minister on certain sections of customs duty on CBU Units. The previous duty on Completely Built Unit was 20%.
In India, Volvo assembles only the XC90 SUV locally at its Trucks Plant near Bengaluru. The other vehicles are sold as CBU’s or Full imports. The Budget proposals mean that Volvo will have to incur higher costs on imports of its every other vehicle. Treading on the same lines, Czech brand Skoda had previously announced an increase in prices across its product range in India, from March 2018.
Charles Frump, MD, Volvo Car India said that the Finance Budget proposals were surprising and the automobile sector will witness a passing impact due to the increase in duty. But, Volvo India, in a press statement, confirmed that it would not be able to absorb the higher costs and price hike would be effective from the current month on all new stocks.
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Charles Frump also called for subsidies on hybrids and plug-in hybrids. He believes that these would be important for facilitating smoother and easy transition of the Automobile Industry to being fully electric driven. Also, such measures by the government will have immediate and positive environmental impact. Volvo Car’s vision is in sync with that of Government of India’s vision of a fully electric Indian Automobile Sector. However, it also believes that the hybrids are the interim future. And subsidies on hybrid vehicles would only accelerate the transition.
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