Maruti trims car prices by ₹5,000 after govt tax cut

NEWDELHI: Enthused by the Union government’s decision to reduce corporate tax rates from 30% to 22%, Maruti Suzuki India Ltd on Wednesday reduced the prices of entry-level cars and diesel variants of all products by ₹5,000 to boost demand during the festivities.

In the run up to the Navratri and Diwali festivals, India’s largest vehicle manufacturer has brought down the prices of the Alto K10 and 800, Celerio, diesel variants of the Swift, Dzire, Vitara Brezza and S-cross.

“The new prices will be applicable from September 25 across the country. This reduction of price will be over and above the current promotional offers for the company’s vehicle range. The company is optimistic that the price reduction will bring down the cost of acquisition, especially for entry-level customers. This announcement around the festive season will help boost customer sentiment and revive the market to create demand,” Maruti said in a press release.

Maruti Suzuki’s festive offers include discounts of ₹40,000 to ₹100,000 across different models, to lure potential customers back to the showrooms.

After the reduction in corporate tax rates, ratings agencies and brokerages were expecting original equipment manufacturers (OEMS) to cut product prices to boost demand.

“Under the current weak demand conditions, OEMS are expected to pass on some the benefits of tax revision to the end consumers. This implies that the price correction in coming months will, to an extent, address the demand side issues,” said Pavethra Ponniah, vice-president and sector head, Icra.

To boost consumer demand and increase spending from private companies, the government on September 20 announced a reduction in corporate tax rates from 30% to 22%. The effective tax to be paid by the firms, including surcharge and cess, will be 25.17%. Automakers exploring opportunities to start manufacturing in India stand to benefit more, as the tax rate for new manufacturing firms were cut from 25% to 15%, provided they start operations by March 31, 2023.