Car prices to go down, companies cheer tax cut

December 7th, 2008 - 9:53 pm ICT by IANS  

Chennai, Dec 7 (IANS) Welcoming the four percent central value-added tax cut, announced by the government Sunday in a Rs.3,000-billion ($60- billion) stimulus package, major auto makers said they will soon cut prices of vehicles.”As per my understanding, all car prices are likely to come down by four percent,” was the immediate response of auto market leader Maruti Suzuki’s chairman R.C. Bhargava.

However, several other companies refused to quantify the price cut, saying “we have to study the fine print”.

K. Sridharan, executive director of commercial vehicle major Ashok Leyland, told IANS: “The four percent tax cut works out to around Rs.30,000 per vehicle. How much of that will be passed on (to the consumers) will be decided after seeing the details.”

He added that there were fully built vehicles on which tax had already been paid and this aspect had to be taken into consideration.

Added Arvind Saxena, senior vice-president (marketing and Sales), Hyundai Motor India: “We have to see the final notification to understand how the announcement would work out at the ground level.”

Echoing him, P. Balendran, director and vice-president (corporate affairs) of General Motors India, said: “We have to see the fine print to make an announcement.”

Ford India executive director (marketing, sales and services) Nigel E. Wark told IANS that the company would pass on the duty cut to the consumers. He, however, added: “I am unable to quantify the amount as we are in the process of working out the details.”

According to him, the automobile industry was looking for availability of finances for vehicle buyers, and the stimulus package and the RBI’s (Reserve Bank of India) rate cuts, announcement Saturday, are expected to do that.

Added H.S. Goindi, president (marketing) of TVS Motor Co: “There will be a price reduction, but how much it should be will be worked out on Monday.”

Meanwhile, auto industry forum Society of Indian Automobile Manufacturers (SIAM) welcomed the rate cuts by the RBI as well as the stimulus package. Talking of the package, SIAM director general Dilip Chenoy said: “It’s not a comprehensive package. But it’s a good beginning.”

SIAM vice-president Pawan Goenka, also president of automotive division of Mahindra and Mahindra, said: “We will definitely pass on all benefits to the consumers.”

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