Car prices fall as cos pass on excise benefit

Business News: Maruti Suzuki, Hyundai Motor, Mitsubishi and Toyota Kirloskar have cut prices between 3 per cent and 3.5 per cent following the announcement of a 4 per cent cut in Cenvat by the government of India. Recently the government of India has declared a package to bail out many sectors from the impact of the global financial crisis.

The reduction in the Cenvat will help manufacturers to reduce the price of their products in order to maintain the demand and supply forces. During the global crisis there is impact on the demand of many products. As there is reduction in the demands of products, subsequently there is fall in the profit.

Considering the impact of the global financial crisis the government declared a four per cent cut in the Cenvat, which led to fall in the prices of cars in India. The Cenvat was at 14 per cent and the government has brought down this to 10 per cent. First the Maruti has declared the price cut and then more companies have joined the race.

This is a move by the companies to retain the sales during this sluggish time. Other products would also be become cheaper as there is reduction in the Cenvat. However, the economy has been going through a bad phase of global slowdown but the moves by the government of India and the Reserve Bank of India will help the economy to bail out from the impact of the global turmoil, it is expected.