Mulayam's village fair douses hopes

Business hopes of auto dealers at the auto fair in UP Chief Minister Mulayam Singh Yadav's village Sefai have received a jolt, because of the government's decision to set the tax waiver ceiling at just Rs 7 lakh, and exclude luxury cars from this benefit.

Being close to Agra, the Sefai fair had offered a huge advantage of getting trade-tax rebate on vehicles purchased at the fair during December 21-27, which had warmed up the usually "frigid" auto-market of December, and prompted luxury car dealers of Agra to bring out huge advertisements publicising tax savings up to Rs 2.7 lakh on a Skoda.

But the setting of a rebate ceiling by the UP government has disappointed them.

Most auto dealers have retracted their tax rebate offers, cancelling bookings of luxury cars and expensive mechanised equipment worth more than Rs 30 crore.

Talking to Business Standard, Madhur Mittal, director, Triveni Group, dealers for Skoda Auto and JCB, said keeping in view the assurance of a 100 per cent trade-tax rebate on all consumer products purchased in the Sefai Fair given by the UP government, the Triveni group had invited advance bookings for Skoda luxury cars that were to be delivered to buyers in the Sefai fair.

According to sources in the Triveni group, the company had booked at least 50 luxury cars that were to be delivered in the Sefai fair, with a discount of up to Rs 2.7 lakh. But now, with the fixation of the discount ceiling by the UP government, these bookings were being cancelled, which meant a loss of almost Rs 7 crore to the company.

Another auto dealer of Agra, Ashok Autos, had a completely different grievance. According to Ranjna Bansal, chairperson, Agra Automobile Dealers Association, though small and mid-segment cars, including hatchback models were still selling like hot cakes in Sefai, luxury cars had suddenly become off-limit.

She said for the past two months, auto dealers of Agra had been inviting buyers to come to the Sefai fair, promising them huge discounts on advance bookings, but now all these bookings would have to be cancelled.

According to Bansal, Ashok Leyland had sent over 100 trucks and cars to be sold in the Sefai fair. But when the discount was no longer applicable above Rs 7 lakh, there remained no attraction for auto buyers of Agra to drive out to Sefai and then buy cars or trucks at a price that was the same that they would get in Agra.

Besides, she said, usually, people do not purchase vehicles in December as a model purchased in December becomes "one year old" after barely a few days, with the turn of the new year reducing the resale value of the vehicle.

The Sefai fair had raised the hopes of the auto industry of making good business in December but now, the attraction had waned away, giving a loss worth several crore to the Agra auto industry alone, she added.