While commercial vehicle manufacturers say the government?s move to cut excise duties on bus and chassis from 16% to 12% is a welcome step to boost public transport system in the country, they are divided on the idea of passing on the benefit to customers.
Volvo Bus Body Technologies India Pvt Ltd, the joint venture company of Volvo Bus Corporation and Jaico Automobiles, part of the Azad Group, is maintaining a status quo on prices. Asked if the company was looking at passing on the benefit to customers, Akash Passey, managing director, said, ?We will read the fine print first. We have not changed prices the last two and half years we entered the Indian market.? Typically, a Volvo city bus costs around Rs 76 to 80 lakh.
Passey, however, adds that this initiative by the government will not only give a push to the Indian bus industry that is lagging behind compared to the global bus industry but would also open doors for introduction of newer technology in the Indian public transport system. ?This initiative will provide momentum to public transport system and see vehicles going cheaper,? said Abdul Majeed, who leads the auto practice at PricewaterhouseCoopers. The buses are likely to get cheaper in the range of Rs 20,000 to 30,000.
Taking the saga forward is the Hinduja Group flagship and commercial vehicle major, Ashok Leyland. The company went way ahead of all the others and hiked prices of its medium and heavy duty models by 2.5%, with immediate effect, a day before the budget, in a bid to offset the effect of high input costs. However, company officials could not be contacted for details.
High input costs and interest rates have been impacting the industry from quite a while. ?There will be a marginal cut of 2% in prices in commercial vehicles,? said RC Mangal, senior vice president, Asia MotorWorks Ltd. He added that the industry does not see major impact from the announcements made in the Union Budget 2008-09 since other than excise cut on buses and chassis, there is not much for the industry except for the general 2% reduction in the central value added-tax (CENVAT) from 16% to 14%.
On the other hand, Tata Motors went ahead slashing prices of its commercial vehicles including buses, bus chassis and bus body, in view of the reduction of excise duties announced in the Budget. The company announced a 2% reduction in prices of commercial vehicles on Saturday.