Car prices to stay intact

Good news for all those who are planning to buy a car, this seems to be a good time to buy a car as the car prices are likely to stay intact. Yes, the budget 2011-12 is out and as per that there will be no change in the excise duty on the automobiles.

Umesh Karne, analyst at Bric Securities said that the government has taken this decision keeping in mind the rise in the interest rate and price of the raw materials.

Indian auto industry has shown a tremendous growth and is still expanding its wings , however it is still struggling to overcome the constantly increasing input and fuel costs.

Mahantesh Sabarad, analyst at Fortune Financials said that this will give auto biggies a chance to increase the price soon. Government had heavily reduced the excise duty on the small cars from 24 per cent to 16% in 2006-2007 budget, vehicles under four meter and 1,200 cc petrol and 1,500 cc diesel engines. This led to the surge in demand and domestic market grew to over 2 million units per year.

At present amongst the small cars, cars which are less than four meters in length as well as have engine displacement of up to 1200cc petrol or 1500cc diesel are charged 10 per cent excise duty. However, higher powered vehicles are charged are charged 22 per cent excise duty. On the other hand cars more than 2000cc end up paying Rs. 1500 extra. After the Finance Minister announced the budget, the shares of auto giants like Tata Motors, Maruti and Mahindra & Mahindra shoot up.

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