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As tax bonanza draws to a close, Delhi-ites race against time to buy cars

Amberish K Diwanji in New Delhi

Delhi-ites are in a mad rush to buy cars; it is a melee to escape the awesome sales tax (maximum Rs 20,000 per vehicle) effective from May 1.

"The crowds have almost doubled," said a sales consultant at Samara, a Hyundai dealer. A visit to the showroom only proved the point. In the morning, the place was packed, and finding a seat was difficult. Car-loan-hunters seeking an appointment with the finance consultant, had to wait in the queue for more than ten minutes. All through the meeting, the consultant would be badgered by calls and requests from different people.

"The morning crowds are still less," the sales consultant warned. "The real crowd comes in the afternoons and evenings."

Samara, the largest Hyundai showroom in Delhi, is booking almost 50 to 60 cars a day since the past couple of weeks, up from the regular 30 cars or so a day.

The Concorde showroom where the vehicles of Tatas are sold, witnessed similar scenes. The customers were thronging the showroom, seeking to clinch a deal as soon as possible, and fretting at the matters of details that invariably delayed them. They were most eager to ensure that nothing should trip them in meeting the deadline!

Navin Ahuja (not his real name) is worried. He is planning to buy an Indica but has discovered that software professionals like him are a strict no-no when it comes to financing! "These guys are telling me that software guys have a habit of leaving the country, often without clearing their dues. I am not sure if I will get the financing I need to buy the car," he said.

What worries Ahuja is that processing of his papers and convincing the financing guys to give him a loan could take time. "If the entire process takes a week, then what is the point of me rushing it? I have to get the loan before April 30," he lamented.

Ahuja was busy convincing the finance guys at Concorde and even agreed to pay Rs 100,000 as the down payment for the Rs 326,000 Tata Indica. Last seen, he was smiling. "I think they will agree," he said.

The Maruti showroom on Delhi's busy Ring Road, Lajpat Nagar, presented a similar picture, with eager-to-buy customers trooping in. By offering the mid-size Baleno and small-size Wagon-R along with the old faithfuls Zen and Maruti 800, Maruti had increased the customers' choice. The recently launched Wagon-R is certainly the flavour of the month, but its higher price at over Rs 400,000 compared to the over Rs 300,000 figures for the other small cars (Maruti 800 costs less at Rs 273,000) was proving a slight hurdle.

Piali Correa has a new job and a seven-month-old baby. Despite the pressure of work both at home and office, she took leave from work and left the baby with a servant as she went to the dealer's showroom to book her Maruti 800 before it got too late.

Piali Correa had first spoken to the dealer in early March, and was told that booking and delivery will take some time. Worried that she might actually get delayed beyond April 30, she spent the day at the dealer today to ensure that all the formalities were completed so that nothing was left to chance.

She has reason to be happy. Her car was purchased and she will soon pick it up. "I did not want to end up getting late and therefore I spent the day at the dealer and I am glad it is all over now," said a relieved Piali Correa.

The same story is seen at the showrooms of the other models, as middle-class customers run around in April heatwave to try and save some money.

Incidentally, Delhi is the largest car market in India, boasting more cars than Bombay, Madras and Calcutta combined. Cars are also among the cheapest in and around Delhi, thanks to sales tax being minimal. This means that a car in Bombay, where a customer also has to pay the Maharashtra sales tax along with the national sales tax, could cost up to Rs 15,000 more. At least up to April 30.

The Delhi government was wary of imposing a sales tax because it feared that its citizens would then purchase their cars from the neighbouring states of Haryana or Uttar Pradesh.

Metropolitan Delhi includes suburban parts located in these two states and their lower sales tax had in the past weaned away customers. And in their efforts to get higher sales, different states would compete to reduce sales tax. This in turn badly hurt the revenue collection of not just Delhi but also other states.

To resolve the problem, the finance ministers of the northern states met and agreed to impose a uniform sales tax across the region, with effect from May 1. With the imposition of the new uniform sales tax, the state governments hope to generate revenue without fear of losing potential revenue to neighbouring states.

With the tax bonanza of Delhi coming to an end, potential customers are making a beeline for the showrooms. The dealers are happy. So are the customers who succeed in clinching the deal.

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