Toyota stops hybrid Camry production in Bengaluru after GST, cess impact leads to fall in sales

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Toyota stops hybrid Camry production in Bengaluru after GST, cess impact leads to fall in sales

The hike in the price of the car resulted in 73 per cent drop in sales.

Toyota Kirloskar Motor has stopped the production of hybrid Camry at its manufacturing facility in Bengaluru due to a dramatic fall in sales after the Indian government implemented the Goods and Service Tax (GST).

The hybrid Camry had seen an increase in price from Rs 32 lakh to Rs 38 lakh (ex-showroom price of the car in Delhi) due to 28 per cent GST and 15 per cent attendance cess. The hike in the price of the car resulted in 73 per cent drop in sales as compared to last year, the Economic Times reported.

Toyota Kirloskar Motor, which had invested 15 crore in the Camry hybrid facility, stopped the production at the end of September, couple of months after the Prime Minister Narendra Modi-led government implement GST on July 1.

Toyota Kirloskar Motor had also made considerable investment amounting to Rs 24 crore in training, campaigns and service for the hybrid Camry facility. GST has come as a blow to the company's future plans of bringing more hybrid cars in the Indian market.

"We don't have a business case to persuade our parent company in Japan to step up investments on hybrids in Bengaluru, given the punitive tax structure," Shekar Viswanathan, V-C at Toyota Kirloskar Motor told the Economic Times.

The paper reported that the Karnataka industries minister RV Deshpande had written to Finance Minister Arun Jaitley urging the hybrid and electric vehicles be put in the same tax basket. Hybrid cars are taxed 28 percent under GST, while electric vehicles are placed in the 12 per cent basket.

The GST Council, however, refused the proposal, according to Krishna Byre Gowda, agriculture minister and Karnataka's representative on the GST Council. But in a recent meeting, hybrids were exempted from the 5% additional cess imposed on luxury cars.

Under the GST regime, cars attract the highest tax slab of 28 per cent and on top of that, a cess is levied.