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Indian carmakers rush to rev up sales after duty cut
Wednesday, 05 March 2003, 20:30 IST
NEW DELHI: Indian carmakers are bracing to put sales into fifth gear in the current year with a slew of new launches backed by attractive price cuts after the government lowered duties.
Analysts say the duty cut, announced last week in the national budget for 2003-04, will help companies boost sales in the months ahead by luring more buyers.
"In a price sensitive market like India, even a reduction in price by five to seven percent in all car models will fuel increased buying," said leading automobile sector analyst Murad Ali Baig.
"The rise in sales will basically be triggered by new buyers. But I also expect some buyers to graduate to higher end cars because of these cuts," Baig told IANS.
"The excise cut and the consequent lowering of car prices mean that a car is now within the reach of many more people."
Industry analysts estimate sales in the $3 billion domestic car market to post a growth of at least 12 percent in the fiscal year beginning April 1.
Sales of cars and utility vehicles combined in India grew by six percent in April-January, the first 10 months of this financial year.
India's 15 vehicle makers -- including global majors such as Ford, General Motors, Toyota, Honda Motors and Hyundai Motors -- sold only 689,830 cars and utility vehicles in the year ended March 2002.
Finance Minister Jaswant Singh reduced the excise duty, or production tax, on cars, utility vehicles and tyres to 24 percent from 32 percent in the budget.
The Indian auto industry has been battling for years with the government to reduce excise duties on cars. As much as 60 percent of a passenger car's cost in India is accounted for taxes.
The industry had urged the finance minister to bring down duties to 16 percent in the budget as part of an overall tax reform plan. The carmakers say lower prices would promote growth in this vital sector.
"It's an extremely positive budget. The excise duty cut will certainly bring back sales growth in the sector," said Aditya Vij, president and managing director of General Motors India.
"The industry has been relatively flat in the last three years. But now we expect to touch the double digit growth level this year with the price cut," Vij added.
General Motors India, the wholly owned local arm of the world's largest automaker General Motors Corp, has announced a price cut of between 
20,000 and 35,000 across all its models after the duty cut.
The company also plans to launch a slew of new models in the months ahead.
"Last year we sold about 8,500 units in the Indian market. We expect to double that volume this year. We will quadruple volume in three years," Vij said.
"You will be seeing a couple of new models this year. Many new products are in the pipeline."
General Motors Monday launched sports utility vehicle Chevrolet Forester in India. Chevrolet has the distinction of being one of the world's most famous brands and the best seller in North America.
Priced at 1.56 million, the premium segment vehicle will be imported as a completely built unit from General Motors' global partner Fuji Heavy Industries' facility in Japan.
General Motors India, a wholly owned subsidiary of General Motors Corp, has a state-of-the-art facility in Halol, Gujarat, from where it rolls out its German-engineered Opel models - Astra, Corsa and Swing.
It also markets the new generation Vectra in the completely built unit form.
Companies like Maruti Udyog, Hyundai Motors, Ford, Tata Engineering, Fiat and Hindustan Motors have also announced price cuts ranging between five and seven percent across all models after the duty cut.
"The price cut announced by the auto companies is huge and it will definitely motivate many new buyers," said a spokesperson of Hyundai Motors India Ltd., the local arm of the South Korean auto giant.
"As far as sales are concerned, the growth will be tremendous this year," the spokesperson added.
Hyundai Motors, which makes popular hatchback Santro and Sonata and Accent sedans in the country, has cut prices between 15,000 and 70,000 across all its models.
"The new launches in the prevailing market scenario will depend on pick up in sales in response to price cuts," said Jyoti Bhatia, an auto industry analyst with credit rating firm ICRA India Ltd.
Source: IANS
20,000 and 35,000 across all its models after the duty cut.
The company also plans to launch a slew of new models in the months ahead.
"Last year we sold about 8,500 units in the Indian market. We expect to double that volume this year. We will quadruple volume in three years," Vij said.
"You will be seeing a couple of new models this year. Many new products are in the pipeline."
General Motors Monday launched sports utility vehicle Chevrolet Forester in India. Chevrolet has the distinction of being one of the world's most famous brands and the best seller in North America.
Priced at 1.56 million, the premium segment vehicle will be imported as a completely built unit from General Motors' global partner Fuji Heavy Industries' facility in Japan.
General Motors India, a wholly owned subsidiary of General Motors Corp, has a state-of-the-art facility in Halol, Gujarat, from where it rolls out its German-engineered Opel models - Astra, Corsa and Swing.
It also markets the new generation Vectra in the completely built unit form.
Companies like Maruti Udyog, Hyundai Motors, Ford, Tata Engineering, Fiat and Hindustan Motors have also announced price cuts ranging between five and seven percent across all models after the duty cut.
"The price cut announced by the auto companies is huge and it will definitely motivate many new buyers," said a spokesperson of Hyundai Motors India Ltd., the local arm of the South Korean auto giant.
"As far as sales are concerned, the growth will be tremendous this year," the spokesperson added.
Hyundai Motors, which makes popular hatchback Santro and Sonata and Accent sedans in the country, has cut prices between 15,000 and 70,000 across all its models.
"The new launches in the prevailing market scenario will depend on pick up in sales in response to price cuts," said Jyoti Bhatia, an auto industry analyst with credit rating firm ICRA India Ltd.
Source: IANS