Maruti announces price cuts; others follow suit

Maruti Udyog has reduced the prices of its entire small car range soon after the finance minister announced the excise duty cut on small cars from 24 per cent to 16 per cent. The lower prices would be with immediate effect.

As per the new budget proposals, cars which are not longer than 4,000mm and with an engine capacity lower than 1,200cc for petrol engines and 1,500cc for diesel engines would come under the definition of small cars.

Prices of Maruti's small car models like Maruti 800, Omni, Alto, Wagon R and Zen have been reduced by anywhere between Rs12,700 and Rs25,000.

Prices of Maruti's premium hatchback model Swift have been left unchanged as it has an engine capacity of 1,300cc. The company would be launching a diesel version of the Swift by the end of the current year with a 1,300cc engine.

Maruti's main competitor Hyundai has also announced a price reduction of Rs23,000 for its small car model Santro. The company's premium hatchback Getz will not come under the definition of a small car. However, the company is reportedly planning a diesel version of the Getz with a 1,500 cc common rail engine later this year.

Tata Motors has also announced that it would cut prices of the diesel version of the Indica model. Interestingly, the petrol version of the Indica won't be eligible for the excise duty reduction as it has a 1,300cc engine.

It is not just the small cars that are getting cheaper. Mid-size sedans like Honda City and Chevrolet Optra would also cost between Rs10,000 and Rs20,000 less. Car manufacturers have decided to pass on the reduction in peak import duty rate and the cut in import duty on non-ferrous metal and ferro-alloys to customers.

However, prices of premium models which are imported as fully-built units or knocked-down kits would go up because of the imposition of 4 per cent countervailing duty on imports.