By on August 4, 2013


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.

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26 Comments on “Mahindra Tweaks Car To Evade SUV Tax...”

  • avatar

    Good job Mahindra. Democrats in the USA have trouble understanding that people will behave in this manner to escape destructive taxes.

  • avatar

    Nice grill.

  • avatar

    It’s not coincidence that a Ford EcoSport (as sold in India) is 3999 mm long, not counting the spare tire, which apparently doesn’t have to be counted.

  • avatar

    Reminds me of what Ford does with the Transit Connect to avoid the U.S. “chicken tax,” importing them as passenger vans, then removing the interior seating and blocking the side windows.

    • 0 avatar

      It reminds me of that and the “skip shift” feature that GM equipped some manual transmission equipped Corvettes in the 80’s, to avoid the gas guzzler tax. They even went so far IIRC as to put some verbage in the owner’s manual that stated something like “what every you do don’t disconnect the red with white stripe wire on the side of the transmission or this feature will be disabled” in addition to stating that it won’t force you to shift from 1st to 4th if you rev it to above a certain rpm in 1st before attempting to shift to 2nd.

      • 0 avatar

        oddly there’s vestages of this in current GM LSX manual cars

        in the same manual it says not to skip gears as it can cause premature clutch wear and yet…

  • avatar

    Regulations like these created the bizarre Finnish Camaro and Firebird pick-ups back in the 1980s and turned incandescent light bulbs into “heating elements”. People will always find a way.

  • avatar

    Just goes to show you no matter where you are in the world if there is a tax there is someone willing to figure out a way to dodge it and do so.

  • avatar

    As long as this sort of governance is in place, even a corrupt one-party state in China will remain ahead.

  • avatar
    Big Al from Oz

    Good on Mahindra for doing what they are doing. I don’t believe in any form of ridiculous regulation. Regulation can be very productive, but it can also lead to a lack of progress. Like the Transit Connects and the Chicken Tax etc.

    The obstructive style of regulations are designed by ‘special’ interest groups to generally advantage a few at the cost of many, like the Chicken Tax.

    One of the most ridiculous regulation/barrier I have ever heard of was here in Australia with our apple farmers. The New Zealanders wanted to export apples to Australia.

    Our apple farmers convinced the government that if New Zealand apples made it to our shores there would never be an apple industry in Australia. They claimed New Zealand apples had diseases that wouldn’t allow for an apple industry to provide for our local consumption.

    The funny thing is, how can New Zealand have an apple industry if their apples destroyed apples through disease. Not only do the New Zealander’s have an apple industry, but it’s large enough to export, go figure that one.

    It’s just our farmers didn’t want to compete and compete fairly. The motor vehicle industry is almost or as bad as the global agri industry.

  • avatar
    Richard Chen

    Let’s not forget about CAFE stateside. Talk about ethanol and SUV loopholes…

  • avatar
    schmitt trigger

    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.

    • 0 avatar

      There are a whole series of requirements (including many safety standards, iirc) that apply to cars, but not to trucks, so every car company selling in North America has an incentive to clasify vehicles as trucks rather than cars – and they do, whenever possible. Thus, every minivan since the first Caravan/Voyager, every SUV and CUV, etc., get classified as trucks

      • 0 avatar

        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.

  • avatar

    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.

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