India Automaker Group Cuts Sales Forecast on Levies, Diesel Ban

  • Government levies include luxury and infrastructure taxes
  • Passenger vehicles sales expanded at fastest pace in 5 years

India’s automaker association cut its annual sales forecast for a second time in as many months, after the government imposed levies on passenger vehicles and the nation’s highest court extended a ban on registrations of large diesel vehicles in New Delhi.

Deliveries of cars, sport utility vehicles and vans may gain as much as 8 percent for the year started in April, Sugato Sen, deputy director general of the Society of Indian Automobile Manufacturers, said Friday in New Delhi. The group, which counts Maruti Suzuki India Ltd. and Hyundai Motor Co. among its members, last month cut its sales growth forecast by 1 percentage point to 11 percent.

Passenger vehicle sales had risen at the fastest pace in five years, gaining 7.2 percent, in the year that ended March as new models by Maruti, Hyundai and Renault SA drew buyers. The government will levy a 1 percent luxury tax on autos that cost more than 1 million rupees ($14,967) as well as an infrastructure tax that varies by engine capacity.

India’s Supreme Court in December banned the registration of diesel vehicles with engine capacity of 2 liters or more in the capital, and extended the moratorium last month. The prohibition has dented sales for automakers including Toyota Motor Corp. and prompted the introduction of gasoline-engine options or smaller diesel engines.

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