Auto News

Car Manufacturers Set to Cut Car Prices

By Motortrend India Staff   |   08 December,2008

Car manufacturers are all set to cut down their car prices by three to four percent. This initiative is taken by car manufacturers in response to the reduction in the CENVAT (Central Value Added Tax) rate by the Indian Government.

Car companies at present pay CENVAT, a tax of 12% on small cars, and about 24% on other cars. This tax has now come down to about 8% and 20%, respectively.

With this cut in excise duty, all car manufacturers including Maruti Suzuki, Tata Motors, Hyundai, Honda, and Mahindra & Mahindra are willing to pass the benefits of excise duty to their customers.

Taking the lead, Maruti Suzuki has announced a reduction of Rs 8,000 in the price of its small car Alto. The chairman of Maruti Suzuki India (MSI), 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.”

An official from Tata Motors also said, “Tata Motors will pass on to customers the benefits that will come in through the cut in Cenvat for all our products – passenger and commercial vehicles, immediately. We are working out the details to ascertain the exact quantum of details of the benefits to be passed on to the customers.”

General Motors also plans to cut down the car prices but the company wants to evaluate some possibilities and the actual impact of the excise duty cut on car prices before the announcement.

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