Interim Budget 2014 - Cars & Motorcycles In India Prices To Go Down

The general mood in the Indian automotive industry is cheerful as of now, following the announcement of excise duty cuts by the Finance Minister during the interim budget 2014 presentation.

Also Read: Revised Vehicle Price List Post Excise Duty Cut

Duty has been reduced by 4 percent for most segments, but the SUV category has benefited the most with a 6 percent tax cut. As a result of this companies are expected to pass on the benefits to customers through price reductions.

Also Read: Mahindra Reva e2o Now More Affordable

While in the case of small cars this would translate to a reduction in price of around Rs 10,000 on an average, prices of larger SUVs and luxury cars can go down by the lakhs.

A few companies were quick to announce their revised price list, including luxury car maker Mercedes-Benz and two wheeler manufacturer Honda. Others such as Maruti and Nissan have welcomed the duty reduction and have said they will pass on the benefits to customers, but are yet announce a revised price list.

On the other hand, the excise duty cut could also negatively affect some companies which have surplus inventory stacked up. If these companies announce a price cut now they will be forced to sell already manufactured units for lower prices as well, in which case they would have to swallow the losses.

For this very reason some companies are expected to delay changing prices of their cars and some might pass on only a share of the benefits received from the excise cuts.