Yesterday Ford launched the EcoSport in India, which has awestruck everyone including other automobile manufacturers. While customers are overjoyed and are rushing to book their EcoSport, competitors are scratching their heads wondering how Ford managed to price their compact SUV so aggressively. There is no doubt about the advantages of localisation which have benefitted Ford but there is one crucial thing which helps in pricing the EcoSport so aggressively – lower excise duties.
Sub 4-metre cars are becoming the next big thing in India and are undoubtedly the game changers in their segment. If we look at a few sub 4-metre cars, we will notice how they have got the volumes for the company. The first compact car was the Indigo eCS, which raked in good volumes. Next was Maruti Suzuki with the sub 4-metre Swift DZire, which although hideous in terms of rear end design, has gone to become the highest selling car in India (last month). The Mahindra Quanto and Premier RiO haven’t been game changers though, even after being sub 4-metre in length.
The next sub 4-metre vehicle to change the fortunes of the company is the Honda Amaze. 22,000 bookings since launch is an achievement for the Japanese automaker who hasn’t sold so many cars in India in such a short time span. Mahindra recently launched their sub 4-metre Verito (Vibe) and we await to sell how it performs. Now there are a slew of sub 4-metre cars in the pipeline, including the Mahindra S101, Volkswagen Taigun and Chevrolet Enjoy Mini. If you are look at these renderings by MotorBeam reader Amish Dhulla, you will notice the Enjoy looks so much better in compact form.
How much does a difference does a sub 4-metre vehicle make in terms of cost? Significant. The excise duty on longer than 4-metre cars is 24% (27% in case they have a bigger engine and 30% in case they come under the SUV nomenclature). Sub 4-metre cars (meeting the engine criteria as well) are slapped with only 12% excise duty, that is exactly half and can translate to more than Rs. 50,000/- worth of savings (depending on the price bracket of course). Should BMW take advantage of the sub 4-metre small car excuse norms and bring out a sub 1.5-litre diesel engine for the MINI (it already measures less than 4-metres in length), we sure hope they do!
