Tata Motors, Ashok Leyland, Hindustan Motors cut truck prices

In the wake of the excise duty cut, the market could see a steep cut in the prices of heavy motor trucks and other ferrying automobiles.
Finance Minister Pranab Mukherjee had announced a two per cent excise duty cut as part of the interim Budget, on Feb 23, 2008. The government also cut tax rates on services to 10 percent from 12 percent.

Truck manufacturers have decided to pass on the benefits to their customers, to boost a sluggish market.

Tata Motors has reduced the prices of its trucks by 2 per cent.

Eicher Motors chairman S Sandilya said, “The third stimulus will boost demand for commercial vehicles facing declining sales. The further cut in excise duty will improve the financial position of truck makers who are under severe constraint.”

“The impact of the duty reduction will work out, on an average, to over Rs 16,000 per vehicle,” it added.

On February 24, 2009, Ashok Leyland said that they will reduce the cost of their units by Rs 16,000. “In line with the excise duty reduction from 10 per cent to 8 per cent in respect of trucks and auto components, Ashok Leyland will pass on the full benefit to its customers,” the company said in a statement.

In spite of the fact that the inventory of the vehicle called in for a higher excise duty they will pass on the benefit. Ashok Leyland Managing Director R Seshasayee had said the company would pass on the benefit as and when the reduction would be applicable.

Following the trend, Hindustan Motors will also pass on the benefit of the 2% cut in the excise duty to its customers. The company plans to cut the price of its 2.3-tonne mini-truck Winger to about Rs 3.83 lakh (ex-showroom) from the existing Rs 3.90 lakh (ex-showroom).

“We have responded to the government’s move by passing on the benefit from the excise duty cut to our customers. This move will certainly help in increasing demand,” Hindustan Motors Ltd (HML) Managing Director Ravi Santhanam said in a statement.

“In addition, HML will be passing on the duty cut benefit on castings and forgings that it supplies to the OEMs. Spare parts’ prices will also be impacted and would come down,” the statement said.

Reports say that the prices of hybrid vehicles and three wheelers may come down by Rs 28,000 and Rs 6,000 respectively.
Tyre manufacturers like JK tyres have also reduced their units cost by a considerable amount. The company will reduce the truck-tyre prices in the range of Rs 12-175 per tyre, while the prices of other commercial vehicles’ tyres will be reduced by 1.5 per cent. However, the car-tyre prices will not be reduced.

“We are not touching the car-tyre prices because we have already reduced them twice in January,” JK Tyre Marketing Director A S Mehta said.

Rivals Apollo Tyres and Ceat Ltd also reduced tyre prices by about 2 per cent to match the duty cut.

MRF was yet to take a decision on price cuts, Executive Vice President Koshy Varghese said.