The Union Budget for 2017 has been read out and many of the announcements look set to benefit the buying power of consumers. While the auto industry awaits implementation of GST, one announcement in particular has caught our attention is that the Income Tax rate has been halved to five per cent for those earing in the region of Rs 2.5 lakh to Rs 5 lakh.
The move by the government to slash the tax rate by five per cent from the current 10 will see individuals earning in this bracket having a higher amount of disposable income a.k.a more cash in hand. Given our recent growth in purchases over the last few years, this move should see a boost of sales of models in the A-segment and the B-segment. These models constitute a significant part of the car market in India and in the larger scheme of things see a growth in numbers.
In particular, we expect to see further growth for the smaller models as many of the buyers in this part of the market will be first time car owners and are expected to go for one the smaller models on offer.