Swedish automaker Volvo will hike car prices this month post the revision in customs duty. The prices of the Volvo cars will be increased by 5 percent in the country. This move is a result of the government's decision to increase the customs duty on completely knocked-down (CKD) kits and fully-imported vehicles in the Union Budget 2018.
Speaking about the price hike, Charles Frump, MD, Volvo Car India said, “The increase in duty came as a surprise and will have a short term impact on the automobile industry. What I would have liked to see is a much needed incentive for hybrids and plug-in hybrids as these solutions have an immediate impact on the environment. Volvo Cars' vision is aligned with the Indian government’s vision of going full electric but till we get to full electric, the interim is hybrids."
The union Budget 2018 announced on Feb 1 this year proposed a customs duty hike on imported engine components from 7.5/10 percent to 15 percent, and an increase in the duty on the vehicle parts that are an element of the CKD kits from 10 percent to 15 percent. It also proposed a rate hike on one section of customs duty on Completely Built Unit (CBU) from 20 percent to 25 percent, hence resulting in the price hike of all the cars that fall into these categories in the Indian market.
Currently, Volvo assembles only the XC90 SUV locally at Volvo Trucks’ plant near Bengaluru. Other than this all the ten Volvo cars in India are imported as the CBU. The product range of Volvo in India includes vehicles such as two versions of the XC60 SUV, XC40 SUV, XC90 Excellence plug-in hybrid, V90 Cross-Country premium hatchback, V40 premium hatchback, V40 Cross-Country premium hatchback, SC60 sedan, SC60 Cross-Country sedan and the all-new SC90 sedan.
However, not only Volvo but after this increased custom duty gets applicable, all the other manufacturers falling under the same category will have to face the same situation and they all will announce the rise in the prices of their vehicles in the Indian auto market. Meanwhile the Czech brand Skoda has already announced an increase in prices across its product range in India, from March 2018 as a result of the same. Stay tuned to V3cars.com for further updates.