Budget 2008 good for small car, two-wheeler makers

3 March, 2008

Budget 2008 has brought good news for the small car sector with provisions to boost sales of all small cars and three-wheelers.

This apart, the proposals for the manufacturing sector, like the across-the-board cut in excise duty to 14 per cent, are likely to be beneficial to the automobile industry. The reduction of 4 per cent excise duty on small cars, two and three wheelers from 16 per cent to 12 per cent will bring the smile back on the faces of small carmakers, two-wheeler makers and bus makers. The reduced duty applies to cars measuring less than four metres with petrol engines less than 1200cc and diesel engines less than 1500cc.

Analysts have said that the new proposals would benefit carmakers like Maruti Suzuki, which makes Alto, WagonR and Zen Estilo, Tata Motors for its Indica, Hyundai Motors, which manufactures the Santro, Getz and i10, and General Motors for its Chevrolet Spark.

While the duty concession would enable Hyundai to cut the price of Santro by Rs 12,000 to 14,000, the i10 by Rs 12,000-Rs15,000 and the Getz by Rs 14,000-16,000 on ex-showroom prices, it would help GM reduce prices on its small cars such as the Chevrolet Spark and Chevrolet U-VA by around Rs 7,500 to Rs 14,000.

The duty cut on small cars is likely to help Tata Motors also cut the price of the Indica. The duty cut on bus chassis manufacture will be an additional boon for Tata Motors as well another bus maker Ashok Leyland. Carmakers such as Renault Nissan, Volkswagen, Honda Motor, and Bajaj Auto, which intend to launch small cars in India will also benefit.

Budget 2008 has also spelt out sops to hybrid car makers by reducing the excise duty on them from 24 per cent to 14 per cent.