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Union Budget Spares The Car Industry
The Union government budget to spare the car industry from any more excise duty is a sigh of relief and a journey on right path. The industry was on a crippled picture fearing any hike in excise would end up with fall in sale and demand for cars. The companies may hike their prices in proportion to the rise of commodities and components. The sale of cars in April-July last saw a rise by 31% with 15.99 lakh units and that of two wheeler stood at 96.71 lakh units making a rise by 27%.
The 2006-07 Union government budget was the first instance when the government cut excise duty on smaller cars having the length of less than 4 meters and 1200 cc petrol and 1500 cc diesel. The cut was from 24% to 16% resulting with imminent demand to the tune of 2 million annual units. There has been further cut in this excise duty by which the current level is10% for smaller cars and 22% for higher end vehicles.
However there is an additional duty amount of Rs15000 for cars of 2000cc. the sale volume has made a deep impact on the share cost of Tata Motors, Maruti Suzuki, M&M and Bajaj. These shares saw rise in their value after the budget announcements. The only major company to see the fall is Hero Honda (0.81%), M&M (>6.32%), Bajaj Auto (>1.61%) and Maruti Suzuki (>4.51%) had good stint in the stock exchange.
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