Vehicles likely to cost 3.5% less

Prices of cars, two-wheelers and commercial vehicles are set to come down by around 3.5% due to the duty cut announced by the government, but the auto industry gave a cautious welcome to the move, saying steps were required to boost the availability of finance in the sector.
Almost all major manufacturers, including Maruti, Hyundai, M&M, Tata and TVS, said they would be passing on the benefits of the reduced duty to customers immediately. Broadly, the 4% relief on ex-factory cost is likely to result in ex-showroom price reduction in the range of Rs 8,000 to 45,000 for different passenger vehicles (cars and SUVs).
The benefit for the truck and buses will be much higher and could be in the range of Rs 30,000 to Rs 2 lakh if the manufacturers pass on the entire benefit to customers. While the two wheeler segment which has been posting negative sales in the past few months could see a price reduction of Rs 1,000 to Rs 3,000.

Though companies are yet to announce a final price cut, it is estimated that a car priced around Rs 3 lakh will be cheaper by around Rs 10,000. Alto, the largest selling car on Indian roads, is expected to be cheaper by Rs 8,000.
Maruti Suzuki chairman R C Bhargava said, “We are looking at passing on the entire benefit to the customers. We shall be cutting down prices in the range of 3.5-4% from midnight and most of our vehicles will be cheaper by that percentage.”
Arvind Saxena, senior VP (marketing and sales) of Hyundai India also welcomed the move. “We will pass it on to the customers,” Saxena said, though adding that “immediate steps” were re
quired to reduce cost of lending (interest rates) and boost finance availability.
While interest rates on auto financing are hovering at record-high levels, banks and NBFCs have been reluctant in lending in view of the tight liquidity position.
Auto companies complain that despite enabling measures by the RBI to boost liquidity in the system, banks have remained “extra vigilant” in lending to the automobile sector, leading to a big contraction in demand.
P M Telang, executive director (commercial vehicles) of Tata Motors, said the company would also pass on the additional benefits due to the duty cuts. However, he added that to give a boost to the
commercial vehicle sector, the government should increase spending in infrastructure and boost credit availability.
Dr Pawan Goenka, president (automotive sector), Mahindra & Mahindra said, “M&M is passing on the entire Cenvat reduction to consumers, and in some high-end models, even more than the announced reduction.
At the top-end, one could expect the price on a Scorpio to come down by Rs 42,000-43,000, or even more. On pick-up trucks, there will be a price reduction of around Rs 17,000-18,000.
A 4% cut in excise is the maximum that one could have expected. However, we were expecting that the extra duty of Rs 20,000 — levied post-Budget, sometime in June, would also be removed because there is no justification for the same now. Also, while the government has announced repo and reverse repo cuts to boost liquidity, nothing specific was done to ease retail financing.”
A Ford spokesperson also said the company will pass on the duty cut benefit to customers.