Maruti Suzuki India Ltd on Thursday announced price reduction for its entire portfolio of entry-level cars as the country’s biggest carmaker looks to revive flagging small car sales by wooing two-wheeler customers who want to upgrade to four-wheelers.

Besides passing on the full benefit of the recent reduction in Goods and Services Tax (GST) rates on automobiles to customers, Maruti Suzuki said it has gone a step further and reduced the prices of entry cars to provide a stimulus to the passenger vehicle industry.

“In a country of 1.4 billion people, car ownership in India is 34 per 1,000 people. If we try to benchmark this with other countries across the globe, Japan is at 612, the US is at 860, Brazil and China are at 214 and 223, respectively,” says Partho Banerjee, Senior Executive Officer, Marketing & Sales, Maruti Suzuki.

Maruti Suzuki strongly felt the need to come up with some offerings to help the two-wheeler customers in upgrading to four-wheelers, says Banerjee.

We have a huge two-wheeler parc of 266 million vehicles while the four-wheeler parc is 48 million, Banerjee says. "With the rise in per capita income, motorisation is expected to increase," he says.

Following the price cuts, which take effect on September 22, Maruti Suzuki's cheapest car, the S-Presso, will start from ₹3.49 lakh (ex-showroom). “The price reduction in S-Presso is ₹1.29 lakh. The reduction has happened from 12.6% to 24% across different variants,” Banerjee adds.

The Alto, which has clocked 4.6 million sales since its launch, is priced starting from ₹3.69 lakh (ex-showroom). “The price reduction here is to the tune of ₹1.07 lakh, from 10% to up to 20% cut compared to GST 1.0,” says Banerjee.

The price cuts are expected to boost small car sales, which have witnessed a decline over the past several years due to price hikes amid stricter emission and safety norms. “Small cars were facing three key challenges: high car prices due to stricter emission and safety norms, lack of affordability due to higher down payment and EMIs was a challenge for the auto industry,” says Banerjee.

Noting that the GST reforms will act as a tailwind for the auto industry, Banerjee said that with GST 2.0, car prices have come down. “The tax rebate on income up to ₹12 lakh will lead to higher disposable incomes who are targeting to buy small cars and the repo rate cut of 100 basis points will result in lower EMIs,” he explained.

The price of the Celerio will start at ₹4.69 lakh (ex-showroom), a reduction of up to ₹94,000. The WagonR price starts at ₹4.98 lakh, a reduction of up to 14%. The price of the Swift hatchback starts at ₹5.78 lakh, a reduction of up to ₹84,000. The Baleno hatch starts at ₹5.98 lakh, a price cut of up to ₹86,100. Entry-level sedan Dzire starts at ₹6.25 lakh, a price cut of up to ₹87,700. The Brezza SUV price starts at ₹8.25 lakh, a price cut of up to ₹112,700. The Grand Vitara SUV price starts at ₹10.76 lakh, a price cut of up to ₹107,000. Multi-purpose vehicle Ertiga has seen the lowest price cut of ₹46,400.

“This is going to be a limited period offer, we will be reviewing it by the end of the calendar year,” says Banerjee.

When asked whether the GST 2.0 reforms put the Indian passenger vehicle industry back on a growth path, Banerjee said, “Many customers held back their car purchases in August. We should not be reading too much from the sales in the next two to three months as these customers will come back to the market. In the next fiscal, we feel the market is going to bounce back to the earlier CAGR of 6-7%.”