Interim budget: Tata Motors, GM to pass on duty cuts to customers

Auto makers have reacted positively to the finance minister's announcement of a 4-6 per cent reduction in central excise duty on automobiles in the interim budget for 2014-15, with Tata Motors and General Motors India saying that they would cut prices with immediate effect.

Finance minister P Chidambaram today announced a reduction in excise duty on small cars, scooters / two-wheelers to 8 per cent from 12 per cent and on large and mid-sized cars to 24 per cent from 27 per cent and to 20 per cent from 24 per cent, respectively, while reducing the duty on SUVs to 24 per cent from 30 per cent.

Both Tata Motors and General Motors India said the reductions are very positive for the industry that is going through its worst phase and that these will make the vehicles more affordable to the consumers as well as the transporters.

The two auto firms said they are waiting for the finer details before passing on the duty relief to consumers.

SUVs will benefit most as these will be subject to 24 per cent excise duty against 30 per cent earlier.

Car market leader Maruti Suzuki India MD and CEO K Ayukawa said the finance minister's announcement was a much needed initiative.

''We hope it will revive sentiment, and encourage people to buy automobiles. With the passenger vehicle industry in the negative zone this year, this was a much needed step,'' he added.

Auto component manufacturers also welcomed the move as positive as the demand w for cars and two-wheelers will reflect on them positively.

The across-the-board reduction in excise duty will give a big boost to the manufacturing sector that has seen a big slump in recent times.

Chidambaram, however, said, the concessions would be applicable only till end of June, before the new government comes up with a new budget.