Mahindra Tweaks Car To Evade SUV Tax

by Faisal Ali Khan

August 4th, 2013 2:16 PM

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 MotorBeam.com, a website covering the automobile industry of India.

#FaisalAliKhan #India

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6 of 26 comments

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.

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- Ect on Aug 05, 2013
  
  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 .
  
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- 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.
  
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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.

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- Faisal Ali Khan on Aug 09, 2013
  
  And guess what? Indians love the way the XUV looks!!
  
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- Corey Lewis on Aug 09, 2013
  
  @Faisal Ali Khan It's horrible! Lol.
  
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