GM, SIAM recommend Re1 hike in diesel to end market distortion

Ahmedabad, Jul 9: Terming the proposal to levy vehicle tax on

cars as a regressive step for industry, General Motors (GM) today said that industry body SIAM and the company has recommended Rs 1 per litre hike in diesel prices to the Government, with a view to end market distortion.

With vast disparity in fuel prices, the demand for diesel cars had reached upto 85 per cent and petrol cars had come down to 15 per cent, which otherwise usually remained at 50:50 per cent levels in India.

The petrol prices had touched Rs 78 per litre level in the recent past, while diesel prices have remained stable at over Rs 40-45 per litre or so.

"We as well as Society of Indian Automobile Manufacturers (SIAM) has recommended a hike in diesel prices by Rs 1 per litre as it would help government earn Rs 6,000 crore revenue," GM Vice President Corporate Communication P Balendran told newsmen.

"The government's revenue earnings from Rs 1 per litre hike shall be three times more as compared to Rs 2,500 crore revenue from the levy of 5 per cent vehicle tax on diesel cars," he said.

The recommendation by GM and SIAM comes in the wake of a Union Planning Commission's study. "The Planning Commission has conducted a study and the report has come out saying that privately owned passenger cars consume only 1.03 per cent of the total diesel consumed in the country," Balendran claimed.

"Therefore, what we have recommended is that levy of additional diesel tax is a regressive step for the industry," he said. "All OEM's have recommended that the right approach will be to increase the diesel prices in small doses and bring down the petrol prices in small doses, so that market distortion is addressed and the sector performs well," he said.

So the way forward is to increase the diesel price a So the way forward is to increase the diesel price a little bit and gradually bring down the petrol prices, so even if industry is sluggish the Government gets more revenue, Balendran said. According to GM, the car market in India is expected to grow between 6-8 per cent this year.

"We will also trace a similar growth at GM if the market grows at this pace," Balendran said. Last month GM sold 7,364 units in India, off which 5,286 units were of its popular brand Beat including its 4,800 diesel units and 700 Travera.

With the strike ending at its vendors plant, GM is hopeful of making delivery of 2,000 Traveras this month, amongst its fastest selling models in India having a waiting period of upto three months.

"We shall make delivery of around 2,000 Traveras this month," Balendran said adding that with the strike ending at our vendors place, the production of Travera at Halol shall be ramped upto 2,500 units from the 1,800 levels soon.

Within next one month time, Traveras production shall reach from 1,800 to 2,500. It's localisation is 100 per cent, he said.

GM has proposed to roll out two new car models Sail (both hatchback and notchback) and Enjoy MPV, in heavy vehicle volume category, in the fourth quarter of this fiscal.

The company plans to ramp up the production capacity at its Halol's facility from 85,000 units per annum to 1.10 lakh units from next year.

PTI