As a fallout of the excise duty hike, Ashok Leyland expects to hike prices of commercial vehicles in the next couple of weeks.
The Budget had announced an increase in excise duty from 10 per cent to 15 per cent on commercial vehicle chassis. “We have no choice but to pass on the price difference to customers. We are watching how competitors are reacting to the announcement and we will soon take a call on this,” said Mr Vinod Dasari, Managing Director.
But the company expects to get some savings from its plant in Pantnagar, which is an excise-free zone. “We are the only large commercial vehicle player with a plant in Pantnagar. The plant has been ramped up to full capacity at 40,000 units. Next year too, we hope to make 40,000 heavy commercial vehicles from here. This could result in savings of Rs 20,000 a vehicle.”
Mr Dasari said the excise duty hike may have only a marginal impact on demand and volume. “This will cause a short-term blip. But it will not stop people from buying a commercial vehicle if they need to buy one. Nor are they going to buy more vehicles even if the excise duty is reduced to zero.”