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Excise Relief to Ailing Auto Sector to Drive Car, Bike Prices Down

Buying your dream vehicle may not be as difficult as you thought. Finance Minister P Chidambaram brought down the excise duty on cars, sports utility vehicles and two-wheelers in a bid to  give relief to the automobile industry, which was registering an unprecedented negative growth.

Published: 18th February 2014 06:00 AM  |   Last Updated: 18th February 2014 01:05 AM   |  A+A-

Buying your dream vehicle may not be as difficult as you thought. Finance Minister P Chidambaram brought down the excise duty on cars, sports utility vehicles and two-wheelers in a bid to  give relief to the automobile industry, which was registering an unprecedented negative growth.

Excise duty for small cars, scooters, motorcycles and commercial vehicles will come down to 8 per cent from 12 per cent earlier. SUVs will attract excise duty of 24 per cent as against 30 per cent earlier. Excise duty on large cars will now be 24 per cent compared with 27 per cent earlier, while the duty on mid-sized cars will go down to 20 per cent from 24 per cent previously.

Reacting almost instantaneously to the excise cuts, car companies announced to reduce prices of their products. Tata Motors and American car maker GM (General Motors) announced to cut prices to boost sales.

“We will definitely pass on the benefits of these excise reductions to the consumers for our new dispatches from tomorrow (as applicable) and are working on the details of the exact reductions,” a Tata Motors spokesperson was quoted by agencies. Tata has seen their sales decline heavily in the last year.

They reported a 34% decline in total vehicle sales from 61,660 in January 2013 to 40,481 in January 2014. Their domestic vehicles segment declined 40% while their CV segment declined 39.67% in January 2014 when compared to the same month last year. GM (India) Vice President P Balendran said that they are now determining the exact amount of reduction after the excise cuts.

K Ayukawa, MD and CEO of India’s largest car maker Maruti said, “We hope it will revive sentiment, and encourage people to buy automobiles. With passenger vehicle industry in negative zone this year, this was a much needed step.”

Vikram Kirloskar, President of Society of Indian Automobile Manufacturers (SIAM) said that the move would make vehicles more affordable. “This could hopefully herald a revival of the manufacturing sector in the days to come,” he was quoted by agencies.



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