He added that the measures announced to lower the steel prices in the domestic market is also going to have a positive impact.
“The immediate benefit seems to be two; one is on the fuel prices, the cost of running obviously comes down, especially for those consumers at the lower end of the spectrum who are very sensitive to the running cost so that is obviously a very positive for Maruti Suzuki and for the industry in general because consumer sentiments for auto purchase is affected a lot by the running cost of the vehicles so that is one good point. And second of course, is the expected steel prices which should come down given some of the restrictions on the export,” Srivastava said.
Srivastava, however, said that there is no direct correlation between demand and fuel prices as it depends ona host of other factors.
“In economic terms as you know car buying is a discretionary purchase and that means the disposable income matters a lot so directionally if you are spending more on essential items like fuel or rent or clothes or food then obviously your disposable income comes down but remember that effect of running cost is different across different segments of the industry as far as consumers are concerned.”
The government announced excise duty cuts on Saturday on petrol and diesel to cushion the impact of high inflation on common man. It was followed by cuts in state taxes by Rajasthan, Kerala and Maharashtra.
Maruti, like other automakers, has been reeling under higher input prices and together with the chip crisis has faced production challenges.
It hiked prices of its vehicles in April and hinted at a further price hike owing to higher input prices.
