Maruti, Hyundai slash prices after excise duty cut
Most car and bike makers have passed onto consumers benefits of tax breaks announced in interim budget
Mumbai: Most automakers, including market leaders Maruti Suzuki and Hyundai, have slashed prices of cars, sports utility vehicles (SUVs), motorcycles and scooters after finance minister P. Chidambaram offered excise duty cuts across passenger vehicle segments in his interim budget announced on Monday ahead of general elections.
Maruti Suzuki India Ltd, the passenger car market leader, has reduced prices by ₹ 8,100 to ₹ 35,000 across different models, according to a company spokesperson.
Mahindra and Mahindra Ltd, India’s largest utility vehicle maker, announced a reduction in prices of its entire passenger vehicle line-up ranging from ₹ 13,000 to ₹ 49,000, the company said in a statement on Wednesday. M&M will also reduce prices of its premium SUV, Ssangyong Rexton, by up to ₹ 92,000, it said. In 2012, the government had an additional levy of 3% on certain categories of SUVs that affected sales in the segment.
“We believe Mahindra and Mahindra would be the major beneficiary of the reduction in excise duty as a 6% relief on SUVs is a positive," Surjit Singh Arora, analyst at Prabhudas Lilladher Pvt. Ltd said in a 17 Februray note.
According to the new tax structure unveiled by Chidambaram on Monday, the excise duty on small cars, motorcycles, scooters and commercial vehicles comes down 4 percentage points to 8% from 12%. The duty on SUVs drops to 24% from 30% earlier. The duty was also revised down by three and four percentage points, respectively, on large and mid-segment cars, to 27% and 20%, respectively.
The move is expected to provide a small boost to the industry at a time when slowing economic growth has stunted sales. Car sales in India are set for the first decline in a decade with the industry selling 5.22% fewer cars during April-January this fiscal year, as compared with a year ago.
Hyundai Motor India Ltd (HMIL), the country’s second largest passenger car maker, said it will pass on the entire duty benefit to buyers, with price cuts ranging from ₹ 10,000 (on Eon, its lowest priced model) to Rs1,35,300 (on Santa Fe, the most expensive one). Honda Cars India Ltd has reduced prices in the range of ₹ 14,650 to ₹ 44,741, the company said in a statement.
Volkswagen Passenger Cars Pvt Ltd too announced a cut in prices of its Polo, Vento and Jetta models starting from ₹ 18,000 to ₹ 51,000. “We hope this move improves the market sentiment in the automotive industry," said Arvind Saxena, managing director of Volkswagen’s passenger cars unit.
Nissan Motor India Pvt. Ltd, the local arm of the Japanese car maker, said it had reduced prices by 4-6% across the model line-up which includes the MicraActive, Micra, Sunny, Evalia, Terrano and Teana.
Among the two-wheeler firms, market leader Hero MotoCorp Ltd announced on Tuesday that it was slashing prices by up to ₹ 4,500 across its range of models.
Honda Motorcycle and Scooter India Pvt. Ltd said the price benefit to Honda customer starts from a minimum of ₹ 1,600 on the Dream Neo and goes upto ₹ 7,600 on CBR250R.
In a 18 February note, India Ratings & Research Pvt. Ltd said that although the excise duty cut would help reduce the cost of ownership marginally, it would not significantly boost sales by volume.
The upside would continue to be constrained amid reduced affordability on account of the overall high cost of ownership and shrinking discretionary spending power.
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