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New Delhi, Feb 28: All those who waited to buy their cars after the budget can start counting their gains.
The country's top carmakers are slashing prices ranging from Rs 16,000-20,000 for compact cars and around Rs 65,000 for premium executive cars.
Hyundai Motor India Limited (HIML) has reduced the prices of Santro, it's largest selling model, by Rs 16,000 while Maruti 800 — the country's largest-selling car model — will cost around Rs 10,000 less.
Tata Engineering, the country's only domestic automaker, had also reduced prices of various models by Rs 15,000-50,000.
The price cut comes soon after finance minister Jaswant Singh lowered the excise duty on motor cars from 32 per cent to 24 per cent and cut customs duty by 5 per cent to 25 per cent, a move to bring down peak customs duty to the Asean levels of 20 per cent by 2004.
Jagdish Khattar, CEO of Maruti Udyog said the 8 per centage point cut in excise duty would translate into a 5.5 per cent drop in a car's showroom price.
“A Santro will now cost Rs 3,19,000 and this price will be effective from tomorrow,” HMIL president B V R Subbu told The Telegraph. “This will also have a knock-on effect on the used car market.”
HMIL had also lowered prices on Accent, a mid sized car and Sonata, a luxury sedan by Rs 30,000 and Rs 65,000 respectively.
Rajiv Dube, vice president (commercial) of Telco said: “Indica will cost around Rs 13,000-20,000 less while prices of 'Indigo' will be lowerd by Rs 18,000-25,000.”
”Prices of Sumo, a multi-utility vechile and Safari, a sports utility vechile will sport a price cut of Rs 26,000 and Rs 50,000 respectively,” he said.
Auto analysts said they expected the other carmakers to also suit though some companies were reluctant to spell out how much the prices would come down by.
The cut in prices will stimulate demand in 2003-04. The car industry, which sells 6 lakh units a year, may be constrained to remove cash discounts and other freebies, though no one is ready to go on record about when this might happen. The freebies are a function of the market and no one will do this as long as the competitor continues to offer them.
Hyundai officials refused to say anything about the cash dissounts and free insurance offer in the first year of purchase.
“The incentives are market driven and seasonal; now that the prices will be lowered, we don't think there is a need to offer incentinves to drive sales volumes,” a Hyundai official said.