Car registrations have sky rocketed in the last three months mainly in the small car category that account for close to 90% of volumes.
The impact of the recent increase in minimum duty rates will only be reflected in registrations towards the end of the year for there are large stocks of unregistered cars in the market and many more on the water that will not be taxed at the higher rates. It may also be appropriate to reinstate the 50% LTV rate on financing of hybrid cars from the current 70% - excess credit towards purchasing of cars is driving imports and holding up the cost of borrowing which has not tracked policy and GSEC yields downwards.
On the flip side taxi hailing platforms like Uber and Pickme have created a professional class of drivers who need financing to get their first vehicle thus any measures to curtail funding is a regressive measure – in such instance the car is a production asset rather than a consumption asset. Getting policy always right is very difficult for there are winners and losers thus one has to balance the various interests.
The restriction imposed on civil servant car permits such as eligibility and transferability have been relaxed which has resulted in a supply of 6-8,000 permits. A bearer of a permit is entitled to a discount of Rs. 3.6 million on the excise taxes payable irrespective of the CIF value of the vehicle.
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