The year 2012 had not been that great for the automobile industry. Car sales of almost every company saw a slump except for industry majors like Maruti Suzuki. Overall performance of the industry was however dismal as compared to what was expected. During the year end, the companies did try to take advantage of the festive season and offered many discounts and goodies. Still, nothing could grab the attention of the customers and thus the slump was evident due to fluctuating fuel prices and interest rates.

In order to help the industry pick-up sales, the Government is trying to pitch in this time. The Government plans to slash excise duties on small cars. It is the small car segment which drives the market. With more and more people coming under better salary slabs, small cars have seen the most demand. Thus, bringing down the excise on small passenger cars might, to some extent, help the industry to bounce back to its normal position. It will also encourage automakers to launch more small cars.

Currently, the excise duty on small cars stands at 12 percent. The Government had previously taken such a measure in the year 2009, when the excise duty was slashed from 12 percent to 8 percent. However, during the reign of Mr. Pranab Mukherjee as finance minister in the last two years, the Government hiked the duty by 2 percent every year. Thus, in the upcoming union budget, it is expected that the duty will be slashed by atleast 2 percent bringing it down to a good 10 percent.

Apart from this, recommendations have also come to levy additional excise duty on diesel cars. Due to the low price of the diesel fuel, customers have shown inclination towards the diesel car segment and thus the petroleum ministry has proposed a hike in excise duty on diesel passenger cars to discourage the diesel consumption by car owners. However de-regulation of diesel fuel prices are also being spoken about. Let us wait for the union budget to see what changes the Government would bring in the automobile industry.

Source – MyDigitalFC