The push given by the finance minister Mr. P Chidambaram with his budget has proved to be a much needed boon for the Indian motor industry which was reeling under the effect of hike in the price of gasoline. Within hours after the budget was announced, every car maker in the country announced a 4% cut in the excise duty which now stands at a decent 12%. Leading the way were Industry bigwigs like Maruti Suzuki, Hyundai Motors, General Motors and Tata Motors who slashed the prices of their automobiles by a considerable amount.

With a price reduction in the range of Rupees 6500 for the Maruti800 and Rupees18030 for the Swift diesel (ex showroom Delhi), all six Maruti models which qualify for the lower excise benefits have now become more affordable. However, it is worth mentioning that Maruti had hiked its prices by Rupees 1000 to Rupees 11,000 a month before the budget.

Hyundai Motors, another industry leader also announced a Rupees 12000 slash in the price of its best-selling Santro Xing variants and the i10, while the Getz has become cheaper by Rupees 14000.

Not one to be left behind, Tata Motors bettered Maruti and Hyundai Motors by reducing the prices of their small cars, buses and trucks with immediate effect. The reduction in the price of its flagship hatchback Indica is in the range of Rs. 8500 - Rs.14600, and that of the newly launched Indigo Compact Sedan in the range of Rs.12700 - Rs.15300. Tata's buses and trucks will now cost two per cent less, but the company has remained mum on the price of its dream project, the NANO.

The winds of change have not spared the revered Skoda Motors as well. The self-proclaimed pioneer of the premium hatchback segment, the Fabia diesel has now become cheaper by a maximum of Rupees 18000 which spells good news for all prospective Fabia owners. With 1303 units sold in February’08 against 644 units sold in February’07, Skoda has registered a staggering growth of 102%. This shows the increasing demand for the Czech built cars, and especially that of the Fabia which sold a total of 524 units out of the 1303units.

There is good news from the stable of the American automotive icon GM as well. The price of the best selling Chevy Spark and the U-VA has gone down by Rupees 7500-14000. One can now expect to see a lot of them zipping around on ours roads.

February 2008 was supposed to be a tough period for domestic carmakers as they had expected consumers to put on hold the idea of buying a new car, hoping to get some incentive from the Union Budget 2008-2009. On the contrary, the domestic passenger car sales increased by 2.31% in February 2008 to 94,756 units from 92,618 units in the same month last year. The country’s leading car maker MarutiSuzuki managed a 2.1 per cent growth with sales of 51,762 units in February, compared to 50,666 units in the same month last year.

The increase in sales of passenger cars can largely be attributed to the sales of General Motors whose figure for the month of February stands at a very respectable 3691 units compared to 1268 units sold last year. Mahindra Renault’s sales of 2,751 units last month also contributed significantly to the total sales figure as in the corresponding month last year.

But all was not well in the automotive world as major carmakers like Tata, Hyundai, Ford and Honda saw a decline in their sales according to the Society of Indian Automobile Manufacturers (SIAM).

But with compact cars constituting around 78% of the total car market, the cut in excise duty will help the volumes to go up further, according to Arvind Saxena, Senior Vice-President, HMIL. This prediction may very well come true as the price cut after the budget might send the Indians into a spending spree.

But according to Dilip Chenoy of SIAM, there are people who expected more out of the budget. Inspite of the budget being a positive one for the automobile industry, there is a lurking fear that the gap between big cars and smaller cars could widen as a result of lack of sops for the former.

This budget it was not only the conventional cars that received a boost.

Mr. Chidambaram also announced a cut in the excide duty of Hybrid cars by 14% as a result of which a Rupees 400000 car will not cost less by a good Rupees40000. With Hybrid cars like the Scorpio and the Civic slated to be introduced in the country soon, the budget couldn’t have been better timed.

Besides cars, tyres have also become cheaper now with leading manufacturers JK Tyres and Ceat announcing slashes in excide duty by 2%.