New Delhi, Feb. 28: Maruti Udyog, Hyundai, Tata Motors and Honda Motors raced to cut prices after Chidambaram slashed the excise duty on small cars to 16 per cent from 24 per cent and pared the peak customs duty from 15 per cent to 12.5 per cent.
The double bounty meant that two-wheeler riders can now begin to seriously think of graduating to four-wheelers.
Carmaker Maruti Udyog announced a price cut ranging between Rs 12,000 and Rs 21,000 across five models, including Maruti 800, Zen, Omni, WagonR and Alto.
Rival Hyundai Motors India cut the price of Santro by Rs 23,000. The prices of other Hyundai models will, however, remain the same. Tata Motors also said it would reduce the prices of some of its cars, including the hatchback Indica.
The price cuts that have been announced will come into effect from tomorrow. By definition, small cars are those with length not exceeding 4,000 millimetres and an engine capacity not over 1,500 cc for diesel cars and 1,200 cc for petrol cars.
“I am confident that the industry will seize the opportunity to make India a hub for manufacturing small and fuel-efficient cars,” Chidambaram said.
The price of Maruti 800 will go down by around Rs 12,000. The Alto price will be slashed by Rs 15,000 and the WagonR by between Rs 15,000 and Rs 21,000. Maruti MD Jagdish Khattar said: “According to initial estimates, we will incur a loss of Rs 30 to 40 crore but it will be good in the long term.”
Tata Motors has decided to cut the prices of the Indica petrol range also, even though it falls outside the defined norms.
A few carmakers also cut prices because of the cut in the customs duty to 12.5 per cent. Honda Motors reduced the prices of its sedan City by up to Rs 10,000 and Accord by Rs 15,000.
The top-end City Vtec model, which has a relatively higher import content, will be cheaper by Rs 10,000, while the two other variants of the model will be cheaper by Rs 2,000. However, the price of the sports utility vehicle CRV was increased by Rs 33,000.
General Motors India also reduced the prices of all models of Chevrolet Optra by up to Rs 20,000.