Single ex-showroom price: Carmakers making a switch to one nation-one price

Confused about different ex-showroom prices of a car in your city and another one? Well, that is soon going to become a thing of the past.

One nation-one price for cars is happening as mass segment players have started shifting to a single ex-showroom price for cars, more than three quarters after the introduction of the goods and services tax (GST), which subsumed all local taxes.

Some luxury carmakers had shifted to a uniform all-India price last year, but now the change is visible among mass segment manufacturers.

Last Wednesday, Japanese carmaker Toyota’s India arm announced prices of its new mid-size sedan Yaris. “The Yaris comes at an introductory price in the range Rs 875,000-1,407,000. Toyota has decided to keep the prices the same across the nation,” the company said. 
 

This is the first instance of  uniform pricing by the carmaker in India. The road prices of the Yaris may still vary between states/cities due to a lack of uniform road tax and registration charges.

N Raja, deputy managing director at Toyota Kirloskar Motor, said the Yaris had many novel features and the company added to it another attractive and transparent feature of “one nation-one selling price”.

“A big enabler in realising one nation-one price was the roll-out of the GST. Our commitment to unify our vehicle prices demonstrates our resolve to offer the best services to our customers in the most transparent way,” Raja said.

Toyota Kirloskar is drawing up a road map to implement one nation-one price for all its models here.

A day after the Yaris announcement, American auto major Ford launched the Freestyle, a compact utility vehicle, at an all India ex-showroom price beginning Rs 509,000. 

Earlier manufacturers used to prepare multiple price lists. Other companies are likely to follow Toyota Kirloskar and Ford. 

R S Kalsi, senior executive director (marketing & sales) at Maruti Suzuki, said the company would bring in a uniform price for its new products. “It is a good practice and leads to transparency. In the pre-GST regime, the tax structure was different in different states but that is no longer the case,” he said.

Rakesh Srivastava, director (sales and marketing), Hyundai, said with the introduction of the GST one nation-one price was the way forward. 

“At Hyundai, we have made a beginning by rationalising the price structure of our existing product line up.”

Companies say this brings convenience for customers and takes away the undue price advantage that a dealer may have owing to his location. Take the case of the National Capital Region (NCR), which has satellite cities like Gurgaon and Noida. The price of the country’s most sold sport utility vehicle, Maruti Vitara Brezza, is Rs 973,108 (for the top variant) in Delhi, but in Noida it is Rs 978,644. 

The situation is not unique to the NCR and buyers often purchase in cities where prices are lower. 

In the pre-GST system, a car used to attract the excise duty, value-added tax (VAT), infrastructure cess, national calamity contingency duty, and octroi, (in some states). The VAT was not uniform across states. Along with octroi, it translated into higher prices in certain states. The system is now more transparent.

The price difference was also owing to freight from the location of the manufacturing unit to markets. 

Now, companies are spreading transportation expenses over the number of units to arrive at the average freight cost.

Industry experts said the exercise could be done without much hassle in the case of fresh launches. However, for the existing models, prices will go up and down in many markets.

End of the road for multiple ex-showroom prices 

• Mass segment carmakers begin launching vehicles with one ex-showroom price 
• Toyota, Ford launch new cars with uniform price last week, Maruti Suzuki to bring single price for new cars 
• GST, introduced in July 2017, is enabling manufacturers to move to uniform prices 
• A uniform price, companies say, helps transparency and is positive for consumers and dealers 
• Few luxury carmakers had launched one nation-one price last year