New Delhi, Dec. 8: Car companies, led by Maruti Suzuki, today slashed prices by 3-4 per cent, passing on the benefit of yesterday’s excise duty cuts to consumers. However, they said the move would not lead to a major spurt in demand.

Maruti Suzuki reduced the price of its largest-selling model — the Alto Standard — by Rs 8,000 to Rs 2,26,724.

India’s No. 1 car maker has cut the prices of all its 11 models. The price of high-end car SX4 Zxi is down by Rs 23,187. The A-star will now cost Rs 3.37-4 lakh, cheaper by up to Rs 14,392.

“These rates are in addition to the discounts already given to customers on select models,” a Maruti spokesperson said. Maruti was offering a discount of Rs 35,000 on the Wagon-R. After today’s revision, it will cost Rs 3.14-3.59 lakh.

Struggling with mounting inventories and a weak bottom line, most car makers were giving discounts ranging between Rs 20,000 and Rs 50,000 on select models.

Hyundai Motor India has slashed the price of its flagship model — the non-AC variant of the Santro — by Rs 8,834. The price of high-end car Sonata is down Rs 44,792.

Hyundai’s latest offering, the i10, will now cost between Rs 3.26 lakh and Rs 5.25 lakh, cheaper by up to Rs 18,381.

The company’s premium hatchback — the Getz — is cheaper by Rs 13,413-19,422

Other car makers will announce similar cuts in the next few days.

After the reduction yesterday in central value-added tax by 4 per cent, car companies will pay an 8 per cent tax on small cars and 20 per cent on others. Small cars are less than 4,000 mm in length and have an engine capacity of not more than 1.2 litres for petrol cars and 1.5 litres for diesel ones.

However, most auto makers said that the cuts would not give a big push to demand. There is no way that the industry will see double-digit growth in sales, they said.

P. Balendran, vice-president of General Motors India, said, “Surely, we will pass on the benefit. We are already offering discounts. However, the key problem are loans, which have dried up.”

Car sales, which recorded double-digit growth for nearly five years till 2007, have seen single-digit growth since January 2008 because of tight credit conditions, high interest rates and a slowing economy. Industry was disappointed with yesterday’s stimulus package because it did not address loans.

“Banks must reduce interest rates and they should lend money for buying vehicles. Unless banks lend, the situation would not change,” said Rajeev Kapur, chief executive officer of Fiat India.

Maruti Suzuki India chairman R.C. Bhargava said that though vehicle prices had been reduced, vehicle repossession rules needed to be relaxed if financing was to become more prevalent. A financier repossesses, or takes back, a car when the owner fails in meeting loan obligations.

“All vehicle financing is against assets (car, two-wheeler etc) and if repossession rules are unworkable, non-banking finance companies and banks remain reluctant to finance vehicles. This is creating a disturbed picture of financing,” said Bhargava.