Two executives in the automotive industry recently emphasized that Maruti Suzuki India Co., Ltd. would benefit most from the government's proposed green tax on gasoline and diesel vehicles.
Highlights:
♦ In fiscal year 2020, Maruti sold a record 106,443 CNG vehicles. Sales of this type of vehicles are increasing by 15.5% annually on average. Compared with diesel, Maruti further promotes CNG vehicles as an environmentally friendly option.
♦ Maruti has stopped selling diesel vehicles and has formulated ambitious plans to expand its CNG model portfolio. Maruti has decided to cooperate with South Korean Hyundai Motor Company, which also sells CNG cars.
♦ Nitin Gadkari, Minister of Road Transport and Highways, announced that from April 1, 2022, a green tax will be imposed on certain types of vehicles. The government proposes to impose a green tax on personal vehicles when the registration certificate is renewed.
♦ It will be levied 15 years later, equivalent to 10% to 25% of the road tax on gasoline or diesel vehicles. When renewing the registration certificate and fitness certificate, similar taxes will also be levied on transportation vehicles or commercial vehicles over eight years old.
♦ According to the green tax guidelines, hybrid vehicles, electric vehicles and vehicles running on clean alternative fuels (such as CNG, ethanol and liquefied petroleum gas (LPG)) will be exempt from green tax. Gasoline or diesel vehicles will be subject to higher taxes.
♦ Higher taxes on gasoline and diesel cars will force people to switch to CNG. In turn, this will benefit companies such as Maruti and Hyundai. In addition, companies and dealers can use green transactions and increased purchase costs as marketing strategies to induce customers to buy CNG vehicles.
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