Excise cuts may make cars, two-wheelers cheaper

February 29th, 2008 - 6:39 pm ICT by admin  

A file-photo of P. Chidambaram
(Lead, Changing dateline)

Chennai/Mumbai, Feb 29 (IANS) Cars and two-wheelers could become cheaper with Finance Minister P. Chidambaram Friday giving excise concessions to the Indian automotive industry in his budget for 2008-09. Chidambaram has cut the excise duty on bus chassis, small cars, two- and three-wheelers from 16 percent to 12 percent.

In the case of hybrid cars, excise duty has been brought down to 14 percent from the current 24 percent, a drastic cut of 10 per cent.

The government’s move brings great relief to the two-wheeler industry, which had been facing virtual obliteration following the heavy influx of small segment cars.

Companies like TVS Motors, Bajaj Auto, Hero Honda, Kinetic, Yamaha and Piaggio would be the gainers.

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.”

As the two-wheeler manufacturing industry celebrated, others did not share in the enthusiasm.

According to Deepak Kothari, president of the Western India Automobile Association: “The effect will be a minimal decrease of Rs.10,000 to Rs.15,000 in the small car segment. Petrol prices, which have already been jacked up, have already had an adverse impact on the sales of light motor vehicles. It would have been better if the finance minister had brought parity in the excise rates among various states.”

Vinod Gupta, chairperson of Spectra Motors, a leading Maruti authorised dealer, agreed and said: “There will be some push in the sales. Rates of small cars will come down by nearly Rs.10,000 and two-wheelers in the range of Rs.2,000 to Rs.3,000.”

With Tata Motors launching its small wonder, the Nano, and planning huge volumes, the cut in excise duty is expected to benefit the company in a large way.

Tata Motors would also benefit from the reduction in excise duty on bus chassis as would Ashok Leyland and Eicher.

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.”

The other car manufacturers who would benefit the most are Maruti Suzuki Limited, Hyundai Motors, Ford and General Motors.

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