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Excise duty cut may not help buyers on wait lists
February, 28th 2014

Rushing in to make the most of the limited period excise cut on automobiles? If the vehicle you are looking for is on wait list, the excise duty slash will probably not mean much for you. Car companies charge 'price at delivery' for vehicles on waiting lists, which means customers must pay for interim hikes when the company marks up prices, leaving them untouched by the new excise cuts that are effective only till June 30.

Take Ford India whose best-selling compact SUV EcoSport still commands anywhere between two and six months on wait list depending on the variant and location. "The price effective at the date of delivery is the price customers are expected to pay for a vehicle on waiting list," said Vinay Piparsania, executive director, marketing sales and service, Ford India. "If there are changes that happen in taxes, rates etc, we apply the new rates on delivery. Booking is simply a means to lock in priority of delivering the car."

Ford, like other car companies, has made two price hikes since the launch of the EcoSport mid-last year. So the roughly Rs 70,000-plus mark-up that the model saw in the past six months will mostly be neutralized by the reduction of excise duties, which analysts say have made SUVs cheaper anywhere between Rs 48,000 and Rs 60,000.

The Ford team is still "working through assessments" to figure out the impact of the duty reduction. "It will take us another day or two to release the new price list," said Piparsania. "But this price reduction is a tax-related announcement and has no relation to our price increases," he said. Honda has a three-month waiting period for new City sedan, while the wait has come down on its best-selling Amaze compact sedan. Like Ford, Honda too went in for two price markups since the launch of the Amaze last year but because the wait list is now down to 2-3 weeks, the excise bonanza won't hurt those going for this model.

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