Budget leads to mix of price announcements by car companies

02 March 2007

New Delhi: The tax initiatives announced in the Union Budget 2007-08 has led to premium cars with large export component becoming a bit cheaper while volume carmakers are raising prices. While Maruti, Hyundai and Tata Motors have announced their intention to increase prices of their vehicles, Czech carmaker Skoda announced a reduction of up to Rs24,000 across its various models.

Hyundai Motors is increasing prices of all its models on account of the rise in education cess. Though Hyundai did not give an indication on the exact quantum of increase, it said the company was working on it and a hike could be expected by the middle of March 2007.

The company says it would increase the prices after it clears all existing bookings and would absorb the additional costs till then. It is not certain whether the price increase would also be applicable on its models (such as the Sonata), which have a high import content.

Maruti has also announced its decision to hike prices from March 15, while other companies such as Ford were taking stock of the situation to review prices.

Skoda India''s price cut is due the peak rate of customs duty declining from 12.5 per cent to 10 per cent. This would impact car models with high import content.

Honda Siel which had indicated a price increase of Rs10,000 on its fully imported model, the CR-V, says that it is still working out the exact impact on other models which are assembled locally, but carry a high import content. These include the Civic, Accord and City.