Latest Car News in India

Thursday, February 20, 2014

By John Andrew

Major car makers cut prices of their vehicles as an impact of reduction in Excise Duty

Following the surprise reduction in excise duty on Monday, carmakers have decided to pass on the benefits to customers by dropping prices, a move they hope will lift their fortunes at the fag end of the fiscal after a year of gloom and dismal sales.  The biggest relief came from Maruti Suzuki that controls more than 40 per cent of the 2.6 million Indian passenger car market. It dropped prices in the range of Rs 8,197 for its basic Maruti 800 model, going up to Rs 30,984 for its SX4 sedan. 
Alto, the country's largest-selling car, will now be cheaper by Rs 11,784 while the newly launched Celerio will cost Rs 13,615 less, which will make the hatchback's starting price at Rs 3, 76,385 (ex-showroom) Delhi. The car was launched at the invitation price of Rs 3.90 lakh on February 6 at the 12th Auto Expo. "We have passed on the excise benefits to the customers and the deliveries for new cars have started from Wednesday based on the new prices," said a senior Maruti Suzuki executive. 
South Korean carmaker Hyundai has gone for bigger price cuts on its cars: the quantum of benefits will vary from Rs 10,000 to Rs 1, 35,300 across all its models. "The reduction in excise duty will substantially reduce prices, making cars more affordable. Hyundai Motor has extended the excise benefits to customers with immediate effect and will also support its dealerships suitably on the price compensation," said Rakesh Srivastava, senior vice president (marketing & sales) Hyundai Motor India. 
The reduction in car prices is likely to resurrect a market that has been knocked out by poor sales, triggered by high fuel prices and rising interest rates, forcing customers to put off purchases.  Car sales fell 10 per cent to 18.07 lakh in 2013, arguably one of the worst years for the industry. Companies like Volkswagen, that have been facing tough times in the Indian market with a 15 per cent drop in sales, has cut prices by Rs 18,000-31,000 for the Polo hatchback. Its Vento sedan will now be cheaper by Rs 14,500-27,000 while the premium Jetta sedan prices have been cut in the range of Rs 38,000-51,000 with immediate effect. 
"We have passed on the entire excise benefit to our customers, and hope this move will help improve the market sentiment in the automotive industry," said Arvind Saxena, MD,Volkswagen Passenger Cars India. 
Utility vehicle maker Mahindra & Mahindra too announced a reduction in prices of its passenger vehicle portfolio spanning from Rs 13,000 to Rs 49,000. The company cut prices of its premium SUV, the Rexton, by up to Rs 92,000. Japanese carmaker Honda Cars India also cut prices in the range of Rs 14,650 to Rs 44,741 for its Brio hatchback to the top-end CR-V range of vehicles. 
On February 17, finance minister P Chidambaram had cut excise duty to 8 per cent from 12 per cent for small cars, scooters, motorcycles and commercial vehicles in a bid to stimulate demand. While the excise was reduced to 20 per cent for mid-sized cars from the earlier 24 per cent, and the large cars would be taxed at 24 per cent from the earlier 27 per cent. 
The excise for the bulky sports utility vehicles was cut to 24 per cent from the earlier 30 per cent. Two-wheeler firms have also cut prices after the government's initiative to spur demand. 
Hero MotoCorp has reduced prices across its product portfolio in the range of 2 per cent to 5 per cent with the maximum cut beingRs 4,500 on its Karizma bike. While its competitor Honda has made its two-wheelers more affordable by cutting its Dream Neo bike byRs 1,600, and the CBR 250R Rs 7,600.

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