Finance Minister P Chidambaram, in the last budget from the UPA government ahead of the general elections, has made the small car cheaper yet again.
In February 2006, the government had reduced the excise duty on small cars from 24 percent to 16 percent and in February 2008 it has reduced the current 16 percent to 12 percent. The budget also proposes to reduce 4 percent excise duty on two wheelers, three wheelers, buses and chasis. Going the green way, the budget also proposes to reduce excise duty on hybrid and electric cars.
This move will give a push to the slowing down two wheelers market which has seen declining sales due to high interest rates. This move will also make India a hub for small cars. Small cars make 78% of the total car market in India and this reduction in the excise duty will increase in volumes for car makers like Maruti, Hyundai, Tata and Chevrolet. Car makers like Ford, Honda and Tata are not much happy as the price difference between small and big cars will increase much more.
The good news for the small car buyers is that, they will get see price cuts up to Rs 16,000, as the manufacturers plan to pass on the reduction on excise to the end user.
Hyundai has announced that the price cut on Santro could be between Rs 12,000 and Rs 14,000, while that on Getz would be between Rs 14,000 and Rs 16,000. While, the price cut on the newly launched i10 could be between Rs 12,000 and Rs 16,000.
General Motors is also cutting he price of its small cars Spark and Aveo U-VA. The prices of their small cars could decrease between Rs 7,500 to Rs 14,000. Not only this, GM plans to refund the price difference to those who bought cars after February 11.
The small cars from Maruti which are 800, Alto, Omni, Zen Estilo, Wagon R and Swift could see a drop from Rs 6,500 to Rs 18,000.
Tata Motors has not reduced the prices but will do so after reviewing the details of the policy changes. If Tata decides to pass on the benefits to the end user