The Indian wing of the Swedish automaker, Volvo has announced that it will increase the prices of its entire product portfolio in the country. Volvo will increase the prices across the range by up to five percent in the Indian market.
Volvo India has decided to increase the prices of its products due to the increase in custom duty on completely knocked down (CKD) and fully-imported vehicles. The Government of India has increased the custom duty in the Union Budget 2018-19 announced on February 1, 2018.
As per the newly proposed custom duty rates, the imported engine parts will see a hike from 7.5/10 percent to 10 percent and the imported vehicle parts or the CKD kits will attract a hike from 10 percent to 15 percent.
Apart from that the fully imported or Completely Built Unit (CBU) vehicle will now attract a customs duty of 25 percent as opposed to the 20 percent.
In a statement, Volvo India stated that the company is unable to absorb the hike in custom duty and hence it is increasing the price. The price hike will come into effect from this month and will apply to the new batch of cars which are yet to be cleared by the customs department.
Currently, Volvo India locally assembles the XC90 SUV at the company's truck plant in Hoskote in Bangalore. The rest of the products are brought to India via CBU route or as fully imported vehicles.
MD of Volvo Car India, Charles Frump stated that the increase in custom duty comes as a surprise and it will have a short-term effect on the automobile industry.
Frump also said that he is expecting to see subsidies on hybrid vehicles as they are stepping stone in the shift towards fully electric vehicles. He also stated that Volvo's vision is in line with the Indian government's plan to go all-electric. But to achieve the goal, it is necessary to have hybrid vehicles to fill the gap and reduce the pollution caused by petrol and diesel vehicles.
DriveSpark's Thoughts On Volvo Price Hike In India
The Government of India has increased the custom duty on imported engine components and vehicles in the Union Budget 2018-19. Now, Volvo has increased the price of its entire product portfolio in India as most of its cars are imported to the country. Expect other luxury car makers to follow the same in the coming days to manage the production cost.