Maruti Suzuki Chairman RC Bhargava welcomed the government's recent tax reforms, calling it a landmark move that could provide much-needed relief to the auto sector.
“Well, firstly, the congratulations are not due to me, the congratulation should be given to the prime minister and the finance minister for implementing such a huge reform measure just before Diwali. And you are right absolutely, I think that with this reform measure every one of us will see some butter somewhere on our plate and Maruti will also see that the gradually disappearing butter over the last five-six years will now come back,” he said.
The auto industry has been under pressure in the last few months, with reduced demand and rising costs. Bhargava admitted that while the tax cuts were timely, the short-term outlook remained constrained given the limited time left in the current fiscal.
“Well, we are talking of a very short time span. The festival season is upon us and there is only that much which can happen in this short period of time, you will appreciate that. This measure is not for one month or two months, this reform measure is a long-term measure which will impact on the economy as we go along. I expect that the small car segment which is about 70% of our total sales of Maruti will gather a growth rate of close to 10% a year going forward from now and the industry as a whole as a result of this growth in the small car segment will start growing at around 7% to 8% a year,” he explained.
In an interview to Business Standard, Bhargava said the price of Maruti’s Alto could drop by Rs 40,000–50,000, while the entry-level WagonR may see reductions between Rs 60,000 and Rs 67,000. Company officials are still working out the details, he added.
Bhargava said that car prices may reduce by 9 per cent rather than 10 per cent, since the GST Council’s decision doesn’t account for automakers’ transportation costs and dealer margins.
In the recent GST reforms, the government announced that small petrol, LPG and CNG cars under 1,200 cc and 4,000 mm length, and diesel cars under 1,500 cc and 4,000 mm length, now attract 18 per cent GST instead of 28 per cent. Bigger cars will be taxed at 40 per cent, while the cess has been scrapped.
Expected cost of Maruti cars base model post tax cuts (ex-showroom)
“Well, firstly, the congratulations are not due to me, the congratulation should be given to the prime minister and the finance minister for implementing such a huge reform measure just before Diwali. And you are right absolutely, I think that with this reform measure every one of us will see some butter somewhere on our plate and Maruti will also see that the gradually disappearing butter over the last five-six years will now come back,” he said.
The auto industry has been under pressure in the last few months, with reduced demand and rising costs. Bhargava admitted that while the tax cuts were timely, the short-term outlook remained constrained given the limited time left in the current fiscal.
“Well, we are talking of a very short time span. The festival season is upon us and there is only that much which can happen in this short period of time, you will appreciate that. This measure is not for one month or two months, this reform measure is a long-term measure which will impact on the economy as we go along. I expect that the small car segment which is about 70% of our total sales of Maruti will gather a growth rate of close to 10% a year going forward from now and the industry as a whole as a result of this growth in the small car segment will start growing at around 7% to 8% a year,” he explained.
In an interview to Business Standard, Bhargava said the price of Maruti’s Alto could drop by Rs 40,000–50,000, while the entry-level WagonR may see reductions between Rs 60,000 and Rs 67,000. Company officials are still working out the details, he added.
Bhargava said that car prices may reduce by 9 per cent rather than 10 per cent, since the GST Council’s decision doesn’t account for automakers’ transportation costs and dealer margins.
In the recent GST reforms, the government announced that small petrol, LPG and CNG cars under 1,200 cc and 4,000 mm length, and diesel cars under 1,500 cc and 4,000 mm length, now attract 18 per cent GST instead of 28 per cent. Bigger cars will be taxed at 40 per cent, while the cess has been scrapped.
Expected cost of Maruti cars base model post tax cuts (ex-showroom)
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