Mahindra Tweaks Car To Evade SUV Tax

Faisal Ali Khan
by Faisal Ali Khan
mahindra tweaks car to evade suv tax

The Indian government is bizarre. A few months back, a new tax was applied on SUVs, resulting in 3% extra excise duty on them. The government justified the move saying that SUVs occupy more space on the road, although the truth is that large sedans occupy more space than SUVs. A criteria was set and if a vehicle fits into all three, then it is classified as an SUV. Thus an SUV is a vehicle which is more than 4-metres in length, having an engine larger than 1.5-litres and a ground clearance of more than 170 mm. Indian roads are pathetic and you really need good ground clearance to prevent scraping the underbody on large and unmarked speed-breakers.

Mahindra’s flagship vehicle, the XUV500 (we had a look at it earlier HERE )saw an immediate price increase due to the SUV tax. Sales started to fall because of the increased prices (also because of increase in competition). Now Mahindra is mainly a utility vehicle manufacturer and almost all its vehicles were affected by the SUV tax. In order to evade the SUV tax on the XUV500, the company made a very minor change.

Mahindra went ahead and added a stone guard which became the lowest point of the vehicle, resulting in a reduced ground clearance of 160 mm (from 200 mm). The XUV500 is no longer classified as an SUV and the company has reduced prices by up to Rs. 33,000/- ($550). Smart move by employing a very cost-effective solution. Now buyers can get rid of the stone guard if they wish to, as the vehicle won’t be taxed after sale.

Faisal Ali Khan is the editor of, a website covering the automobile industry of India.

Join the conversation
6 of 26 comments
  • Schmitt trigger Schmitt trigger on Aug 05, 2013

    Here in the US it was (or is) the opposite. One wanted a vehicle classified as an SUV, because CAFE regulations would not apply. That caused some travesties, like the PT Cruiser, to be classified as SUVs.

    • See 1 previous
    • Scoutdude Scoutdude on Aug 05, 2013

      @ect Unless of course you are importing it and then you want your SUV or CUV to be classified as a passenger vehicle to avoid the chicken tax like the Ford Transit Connect which is imported as a Passenger vehicle. To be classified as a passenger vehicle it must have seating and seat belts for 4 or more passengers. That is also how the Subaru Brat and Baja got into the US w/o paying the chicken tax.

  • Corey Lewis Corey Lewis on Aug 05, 2013

    Gee, I wonder if the front was supposed to look like someone explained a Grand Cherokee over a bad phone connection! And the back is JUST LIKE the last Suzuki XL7. The rear tire hump extending 60% up the side of the car looks rubbish too.

  • Jeffrey An all electric entry level vehicle is needed and as a second car I'm interested. Though I will wait for it to be manufactured in the states with US components eligible for the EV credit.
  • Bob65688581 Small by American standards, this car is just right for Europe, and probably China, although I don't really know, there. Upscale small cars don't exist in the US because Americans associate size and luxury, so it will have a tough time in the States... but again Europe is used to such cars. Audi has been making "small, upscale" since forever. As usual, Americans will miss an opportunity. I'll buy one, though!Contrary to your text, the EX30 has nothing whatsoever to do with the XC40 or C40, being built on a dedicated chassis.
  • Tassos Chinese owned Vollvo-Geely must have the best PR department of all automakers. A TINY maker with only 0.5-0.8% market share in the US, it is in the news every day.I have lost count how many different models Volvo has, and it is shocking how FEW of each miserable one it sells in the US market.Approximately, it sells as many units (TOTAL) as is the total number of loser models it offers.
  • ToolGuy Seems pretty reasonable to me. (Sorry)
  • Luke42 When I moved from Virginia to Illinois, the lack of vehicle safety inspections was a big deal to me. I thought it would be a big change.However, nobody drives around in an unsafe car when they have the money to get their car fixed and driving safely.Also, Virginia's inspection regimine only meant that a car was safe to drive one day a year.Having lived with and without automotive safety inspections, my confusion is that they don't really matter that much.What does matter is preventing poverty in your state, and Illinois' generally pro-union political climate does more for automotive safety (by ensuring fair wages for tradespeople) than ticketing poor people for not having enough money to maintain their cars.