Corporate tax cut brings joy for the automotive industry- Maruti contemplates to share the benefits with customers by cutting prices:
Finance Minister Nirmala Sitharaman has announced corporate tax cut from the existing 30% to 22%. This is a boon for all industries, especially the automotive industry, which is trailing on the difficult path owing to repeated whacks from the industry.
Corporate tax cut announcement came as a solace to the industry. The industry was much hoping that the GST reduction from 28% to 18% will be considered but in vain. Already with the GST and other regulatory mandates, the industry was suffering, the insurance hike and the motor vehicle act has added fuel to the fire. Corporate tax cut at this time is the best move pursued.
Festival season usually brings cheers to the industry. This time in the month of August, the automotive industry leader Maruti has recorded all-time-low growth. But the festival season is on from September 29th where Navratri season begins.
The leader- Maruti is looking forward to resuscitating the wailing period. The OEM expects high retail sales in this month. Continuous price increase and revisions have impacted negatively the car and the SUV segment. Maruti Suzuki's chairman RC Bhargava said Reuters, "We expect the retail sales would witness growth over the month of August. Green shoots are seen. Also, we are contemplating on the recent corporate tax cut and discuss whether we are able to share the benefits at the consumer level. In a day or two we could announce the decisions we make. Now it's too early to comment on anything."
Hyundai stands neutral in terms of the corporate tax cut and nothing in cards to pass on the benefits to customers. Already offers and discounts are being provided to attract customers, the company stated. Toyota also said, the increased cash flow will loosen the strap the company encountered hitherto. In addition to cash flow, the company has plans to invest the additional fund in R&D, incremental CSR activities, rewarding shareholders to invigorate further investments and development of products.
