Tax cut pays, car sales on fast track
With the government playing Santa and reducing the central value-added tax rate by 4%, sales of small cars have risen smartly, giving beleaguered automakers just the Christmas gift they needed. In just over a week since the rate cut, rebates by car companies have resulted in more customers walking into showrooms, enough for a 20-25% increase in sales this December over last month, top auto financiers said. Inventories with dealers, too, are down from 45-50 days in November to around 30 days now. Ashok Khanna, executive vice-president and head of the auto loans unit of HDFC, said the discounts resulting from the lower tax rate have improved buyer interest, particularly in the past five days. But it is only the small-car segment, accounting for nearly three-fourths of sales, which appears to be benefiting, said Sumit Bali, CEO of Kotak Mahindra Prime, the vehicle financing unit of Kotak Mahindra Bank. The country’s top two carmakers, Maruti Suzuki and Hyundai, which get bulk of their rev