The auto sector continues to battle a crisis and India’s largest car maker Maruti Suzuki on Wednesday announced a price cut on some of its models.
Maruti Suzuki India reduced the prices by Rs 5,000 in models such as Alto 800, Alto K10, Swift Diesel, Celerio, Baleno Diesel, Ignis, Dzire Diesel, Tour S Diesel, Vitara Brezza and S-Cross.
The new prices will be applicable from September 25. The company said the cuts will be over and above the current promotional offers.
The decision by Maruti comes just a week after finance minister Nirmala Sitharaman announced a reduction of corporate tax rate for domestic manufacturing companies from 30% to 22% and for new manufacturing firms from 25% to 15%. The tax cut is aimed at reviving growth in India’s slowing economy.
In a statement, Maruti said it is optimistic that the slashing of the prices will help boost customer sentiment and revive the market to create demand during the festive season.
Earlier this week, Maruti Suzuki India’s chairman RC Bhargava told Reuters that it expects sales of cars to be higher in September compared to the previous month.The August domestic sales at Maruti fell 34.3%, one of the biggest monthly drops in recent times.
Ratings agency ICRA had said that the corporate tax cut would benefit the auto industry which accounts for about half of India’s manufacturing gross domestic product (GDP). ICRA had said the tax revision amid trade tensions between US and China will attract foreign direct investment (FDI) in the manufacturing sector.
The Indian economy is experiencing a slowdown. The GDP growth slowed to 5% in the quarter ended June, the slowest pace of growth since March 2013 when it was 4.7%. The corporate tax cuts announced by the finance minister were among many measures by the government aimed at reviving growth.
The monthly passenger vehicle and car sales recorded its steepest fall in August. Passenger vehicle sales plummeted 31.57% year-on-year to 196,524 units in August, passenger car sales were down 41.09% to 115,957 units. The sales figures were the worst since Society of Indian Automobile Manufacturers (SIAM) started recording the data in 1997-98.