Duty cuts positive for automobile sector: Analyst

Chennai, Feb 17: Finance Minister P. Chidambaram’s decision to reduce excise duty on many vehicle segments is positive for two- and four-wheeler makers, said an analyst.

“The duty cut is positive for companies like Hero MotoCorp, Bajaj Auto, TVS Motor, Maruti Suzuki, Tata Motors, Ashok Leyland and Mahindra and Mahindra. The announcement by the finance minister is positive for the automotive sector and is likely to boost demand in the near term,” Yaresh Kothari, a research analyst at Angel Broking, told IANS here.

Chidambaram reduced the excise duty on small cars, motorcycles and commercial vehicles to 8 percent from 12 percent. He also cut excise duty on sports utility vehicles (SUV) to 24 percent from 30 percent and medium sedans from 27-24 percent to 24-20 percent.

For a long time, the automotive industry had been demanding cut in excise duty to spur demand. The manufacturers have been increasing the vehicle prices due to hike in their input costs.