Commercial vehicle makers pass on duty cut benefits

February 25th, 2009 - 6:40 pm ICT by IANS  

New Delhi, Feb 25 (IANS) A day after the central government announced 2-percent excise duty cut, some of India’s commercial vehicle manufacturers Wednesday slashed prices across their trucks and bus line-ups to pass on the benefit to consumers.
“We are passing on the full benefits of the excise duty reduction,” a spokesman for Ashok Leyland said, adding that this would “bring prices down on average slightly more than Rs.16,000″.

External Affairs Minister Pranab Mukherjee, who is also handling the finance portfolio, Tuesday announced excise duty and service tax cuts by 2 percent in what is being touted as the third stimulus package to help corporate India tide over the impact of global economic crisis.

Another auto major Hindustan Motors also trimmed the price of its light commercial vehicle (LCV) - Shifeng Winner - by an average Rs.7,000 following the government’s decision.

“We have responded to the government’s move by passing on the benefit from the excise duty cut to our customers. This move will certainly help in increasing demand,” Hindustan Motors managing director Ravi Santhanam said in a statement.

Commercial Vehicle sales have hit rock bottom recently in India, with the economic slowdown severely affecting credit flow. The sales fell more than 50 percent year-on-year in January this year.

Added R. Seshasayee, managing director of Ashok Leyland: “Demand for commercial vehicles is driven by construction, road development, mining activities etc. So, unless the real economy picks up, there will be no immediate jump in demand.”

According to sources, India’s largest commercial vehicle manufacturer Tata Motors is also in the process of reducing the prices of its commercial vehicles.

However, the reduction of excise duty from 10 percent to 8 percent will not affect the prices of passenger vehicles as the duty attracted by smaller vehicles was always in the 8 percent bracket, while sports utility vehicles and multi-utility vehicles fall in the 20 percent bracket.

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