CLSA: Autos - Benefits from no increase in excise duty and no imposition of specific duty on diesel passenger vehicles

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Autos
Benefits from no increase in excise duty and no imposition of specific duty on diesel passenger vehicles

Key measures::

No increase in excise duty
Positive for the sector versus expectation of a 2% hike
No imposition of duty on diesel passenger vehicles
Positive for M&M and Maruti
Change in definition of CKD for import duty
Completely Knocked-Down (CKDs) defnintion will now
exclude units with pre-assembled engine / gear box /
transmission
CKDs attract 50-60% lower import duty than
SKDs/CBUs
Slightly positive for Maruti as some competitors would
now be placed at a disadvantage and would have to
increase product prices. However, most small car
competitors of Maruti have/in the process of setting up
domestic engine and transmission facilities
Top picks – M&M, Tata Motors and Ashok Leyland