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Maruti Suzuki, Hyundai cut car prices

Arvind Mathew

NEW DELHI: Responding to Finance Minister P. Chidambaram’s announcement of excise duty cut on small cars in his budget speech on Friday, Maruti Suzuki announced a cut in prices of its six cars, while the three other car manufacturers — Tata Motors, Hyundai and General Motors — said they would pass on the benefits to consumers soon.

Maruti Suzuki announced price reduction in its six models (Maruti 800, Omni, Zen, Wagon R, Swift Diesel and Alto) that qualify for the lower excise benefit. After passing on the complete excise duty reduction benefit, the price reduction ranges from Rs. 6,500 for Maruti 800 to Rs. 18,030 for Swift Diesel (ex-showroom Delhi), a company statement said.

Maruti Suzuki India Managing Director and CEO S. Nakanishi said: “In the short term, the reduction in excise duty will make small cars more attractive for customers and offset the negative impact of higher interest rates. This is an encouragement for companies like us, which are making major investments in capacity, research and exports.”

R. Seshasayee

Hyundai Motor India and General Motors also indicated that they would cut their prices by up to Rs. 16,000. Hyundai has decided to pass on the benefit of the excise duty cut to customers on three models — Santro, i10 and Getz. The price cut on Santro could be between Rs. 12,000 and Rs. 14,000, while that on Getz would be between Rs. 14,000 and Rs. 16,000. The price cut on the newly launched i10 could be between Rs. 12,000 and Rs. 16,000.

General Motors, which has two models in the small car segment (Spark and Aveo U-VA), is also likely to announce a cut soon. “We will be cutting the prices of our small cars between Rs. 7,500 and Rs. 14,000,” GM India Vice-President P. Balendran said.

Similarly, Tata Motors said it would reduce the prices of its small cars and commercial vehicles (including buses, bus chassis and bus body), in view of the reduction of excise duties announced in the budget. The new applicable prices will be announced in the next few days, after the company has studied the details of the policy changes, it said in a statement.

R. Seshasayee, Managing Director, Ashok Leyland, has stated that a fine balance has been achieved by reckoning the political context and economic principles.

What has helped the Finance Minister is the backdrop of an excellent scorecard: an estimated GDP growth rate of 8.7% despite global slowdown, buoyant revenue receipts exceeding estimates and deficits in line with milestones. The budget addresses the recent loss of momentum in economic growth. It addresses the national priority of inclusive growth. It also recognizes the need to rein in inflation.

The FM’s prescription to promote consumption is classical and proven: increase disposable income by reducing personal tax burden; simultaneously slash prices through excise duty reduction.

The massive outlay for social infrastructure and the rural sector will also fuel consumption.

For the commercial vehicle industry, excise duty reduction is a move in the right direction as it reduces the embedded taxation and improves competitiveness of the Indian industry. “I particularly welcome the additional excise duty reduction in respect of bus and chassis — public transport has a potentially much larger and beneficial role to play. I also welcome the tax incentives for green technology,” he said in a statement.

However, Ford has expressed disappointment for neglecting its request of uniform excise tax regime “Reducing the excise duty on the small cars alone has actually widened the gap between small and other car segments. The excise duty on the mid-size car now stands at 24 per cent, double that of a small car, which is disappointing for the customers of mid-size and larger cars,” said Ford India President and Managing Director Arvind Mathew.

“Though reduction in corporate taxes and customs duties, which the automobile industry were eagerly been waiting for, is another miss in the budget. But reduction in customs duties for project imports will benefit us and is a welcome step, especially in light of Ford India’s recent expansion and growth plans,” he added.

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