Will pass on cess hike to customers; won't have impact on margin: M&M

The goods and services tax (GST) council, which met in Hyderabad over the weekend has raised the cess on large luxury cars to 20 percent, sports utility vehicles (SUVs) to 22 percent and mid-size sedans to 17 percent from 15 percent for each of these categories. This has now raised prospects of some types of premium vehicles getting dearer ahead of the festive season.

In an interview to CNBC-TV18, Pawan Goenka, MD of Mahindra and Mahindra (M&M) spoke about the latest happenings in his company and sector.

We are grateful to the council that they have basically brought back the pre-GST relative parity in the excise duty. Earlier the difference was 3-6 percent and that is what they have done now, he said.

Hybrid cars get 2-7 percent relief on cess, he added.

Bolero will attract 7 percent additional cess and XUV 500 and Scorpio will attract 5 percent additional cess, said Goenka.

Don’t expect large impact of cess increase on demand, he further mentioned.

We will definitely be passing on the total impact of increase so to that extent we will not have an impact on margins, Goenka added.

For full interview, watch accompanying video...