A high tax rate on hybrids due to the new Goods and Services Tax (GST) has resulted in Toyota discontinuing the Camry Hybrid luxury sedan from the Indian market. Over the last 3 months, sales of the Camry Hybrid has fallen by 73 % compared to the same period last year. After culling the Camry Hybrid, Toyota will use the assembly facility to build the Camry Petrol (non-hybrid version).
The previous tax structure taxed hybrids lower, at 30 % (12.5 % excise duty + 14.5 % VAT and 1 % NCCD). This allowed companies to price hybrid cars attractively. The GST has increased total duty payable on hybrid cars to 48 % (28 % GST + 15 % cess).
This has made the Toyota Camry Hybrid about 7.5 lakhs costlier than the regular, petrol version. Previously, this price difference was just 1.3 lakhs, which made most customers opt for the Camry Hybrid instead of the petrol version due to the higher mileage promised by the former.
According to Toyota,a Camry Hybrid buyer can save Rs. 1.14 lakhs in fuel costs in 3 years due to the higher fuel efficiency of the car. The breakeven point for a person buying the hybrid version was about 1.54 years. Post GST, this point has been pushed to 17.82 years.
Toyota has also noted that it won’t launch more hybrid cars in India as the high taxation on hybrids is making customers choose cars that run on petrol and diesel instead. Toyota is also undecided about introducing electric cars in India.
Here are some comments from Shekar Viswanathan, Vice-Chairman at Toyota Kirloskar Motor,
We don’t have a business case to persuade our parent company in Japan to step up investments on hybrids in Bengaluru, given the punitive tax structure. A lower tax rate would have led to both higher volumes, and tax revenues. The government should not be blinded by luxury versus non-luxury debate. Luxury vehicles create as many jobs as non-luxury vehicles do.
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