The excise duty cut announced in the interim budget in February has been extended till 31st December 2014, heaving a sigh of relief for auto manufacturers who have been struggling with low sales since the past two years. The previous government had announced the excise cut in a bid to resurrect dwindling sales in the auto sector. The duty cut would have expired on 30th June, and as a result many were expecting vehicle prices to go up once again.
As per the existing interim budget excise duty rates, sub 4-metre vehicles will continue to attract 8 percent, while other cars and SUVs attract 24 percent. The truck chassis continues to attract 9 percent, while the bus chassis attracts 10 percent. Full bodied bus and trucks continue to attract 8 percent as per the extended excise duty rates. Manufacturers are calling the move to have come at the right time and will give the auto industry sufficient time to recover.
With the festive season coming up in a few months, manufacturers are expecting to see a positive turn over in sales courtesy of the range of new launches that will hit the market in the following months. The auto sector witnessed a marginal improvement of 3.08 percent in the month of May this year after the formation of the new and stable government at the centre. The two-wheeler market was the only sector to have registered positive growth in the last fiscal, riding high on the success of scooters.
While welcoming the move, General Motors also stated that the company hopes to extend the excise duty rates for the complete year as the sector continues to be sluggish. The company is also optimistic the new government will also announce other measures in the union budget that is slated to be presented on 10th July 2014. The upward growth trend is expected to continue in the overall vehicle segments till the end of the year, courtesy of the low excise duty rates. Every manufacturer has called the move positive.
