Praise Mr Chindamabaram and feel good, the excise duty cut (lowered to 12 percent from 16 percent) on small cars, buses, motorcycles, scooters and three wheelers will make your beloved machines cheaper. Major manufacturers have already started announcing price cuts on their products.
Small and Hybrid cars:
“We have decided to pass on the benefit of the excise duty cut to customers on three models–Santro, i10 and the Getz– effective April 1,”Hyundai said. 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. Hyundai has decided to cut the prices of the newly launched i10 too. i10 price cut could be between Rs 12,000 and Rs 16,000. General Motors is also cutting he price of its small cars Spark and Aveo U-VA. “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. Maruti Suzuki and Tata Motors might announce a similar price cut soon .
Two & Three wheelers:
Two wheeler manufacturers which have been sever slump in sales will finally get a relief through the duty cut. “The market had been wanting this to arrest the slide in demand in recent months,” Munjal said. “The tax proposals unveiled in the budget will put more money into the hands of people and that will definitely kick-start demand again.” “Hero Honda will consider reducing prices and pass on some benefits,” Managing Director Pawan Munjal said.
Niraj Bajaj, director of India’s leading two wheeler manufacturer Bajaj Auto Ltd, said: “It was really heartening to hear the union finance minister announcing the slash in excise as this will result not only in bringing down prices but also in boosting the sagging sales of two-wheelers.”
Buses and trucks:
According to K. Sridharan, executive director of Ashok Leyland, “The budget is good for the auto industry. The excise duty reduction will be passed on to the customers.”
Auto Components :
“The cut in excise duty for cars, buses and two-wheelers is the only positive for the auto component sector as it can boost our volumes, through not essentially our margins as auto companies may pass the savings to customers. Anyhow, volume is critical now.”
Overall the budget is good for Auto Industry not just because of duty cut but also they will benefit indirectly from these please all budget. Increase in Income Tax limit and will bring enough liquidity and which in turn will increase the buying ability of the consumers.
Stock market response:
After a long time auto sector Index managed to end in green with Maruti Suzuki (3.9%), Hero Honda (2.3%), Ashok Leyland (4.2%), Bajaj Auto (2.75%) and Mahindra & Mahindra (1.9%). However, Tata Motors ended with a sharp loss of 1.4%.
Update: Mr Arvind Mathew President and Managing Director, Ford India view on 2008 budget.
A mixed bag for the Auto Industry. Despite long requesting for the rationalisation of the excise duties on the various segments, but it was disappointing to see that our request on uniform excise tax has been neglected for yet another year. 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%, double that of a small car, which is disappointing for the customers of mid-size and larger cars. Though reduction in corporate taxes and customs duties, which automobile industry were eagerly been awaiting 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. There have been no significant investments made for improving roads, ports, etc, other than focus on the power sector. This budget primarily focuses on social sectors, health and education. On an overall positive side, the budget offers significant income tax exemptions to the salaried, which will help put more disposable income in the hands of consumers. This will result in the growth of consumer spending, and may benefit the auto sector. To compete with the global economies, India needs a lot attention towards infrastructure.
