Auto major Honda Siel Cars India Ltd on Wednesday said it will increase prices across all models from April 2 since the sales tax holiday it enjoys in Uttar Pradesh, is coming to an end."Since inception, we have been exempted from the four per cent Central Sales Tax in Uttar Pradesh related to the amount of investments we make in the state. This tax holiday is coming to an end," Jnaneswar Sen, senior general manager, HSCI said.
The company, however, has not decided on the quantum of the increase and would take a decision on whether the whole three per cent increase would be passed on to the consumers or not.
"We have not decided whether we will pass on the increase fully to the customers or whether we'll absorb a part of it," he said.
Sen said the company needs to take competition into consideration while deciding whether it passes on the entire increase to the customer or not.
If the company decides to pass on the entire sales tax increase to the customers then it would make its sedan 'City', which is being presently sold at Rs 6.75 lakh, costlier by Rs 10,250. While 'Civic', priced at Rs 10.88 lakh, could be dearer by about Rs 32,644 and 'Accord', which is tagged at Rs 14.92 lakh, may be expensive in a range of Rs 35,000-44,760.
Honda, which is planning to set up its second greenfield manufacturing facility in Rajasthan, is likely to sign a memorandum of understanding with the state government in the next couple of months.
The company's new car facility will be spread over an area of 700 acres with an initial capacity to produce 50,000 units per annum. When fully operational, the facility would have an overall capacity to produce 2.5 lakh cars per annum.
The company is looking at having a capacity of 1.5 lakh units by 2010. HSCI, a joint venture between Honda Motor of Japan and Siddharth Shriram Group firm Siel Ltd, made an initial investment of Rs 450 crore (Rs 4.5 billion) in 1997 to set up its unit with a capacity of 30,000 cars a year in Greater Noida.
Later, the company increased the capacity to 50,000 cars with an investment of Rs 150 crore (Rs 1.5 billion) and is expanding it to one lakh with an investment of Rs 300 crore (Rs 3 billion). HSCI has said it will set up a plant in Rajasthan for making compact cars.
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