The raise of the custom duty on locally assembled foreign luxury cars have been increased from 10% to 30%, by the Indian government. Therefore, the car makers have decided to pass on the higher tax to the customers. As a result, Mercedes, BMW, Audi, Land Rover and Renault will soon raise prices of cars assembled in India by up to Rs 10 lakh.
As per Peter Honegg, chief executive officer and managing director, Mercedes Benz India, the company would start the raise by concentrating the increase on one of its four major models. Its top-end S sedan which falls in the price range of Rs. 84.3 lakh to more than 1 crore would be increased up to 8 lakhs. On the other hand, Audi, BMW, and Land Rover, which lay in the range of Rs 30-90 lakh would too soon go for the price hike.
According to the experts, the nominal customs duty on luxury cars initiated the competitive prices. In addition, the rise and income and financial, further led the sales of the luxury cars to have doubled to 15,000 in the fiscal 2010-2011. Therefore, as per the experts, the increase in the tax will hit premium car sales in India.
Michael Pershke, chief executive officer, Audi India, said that the company would set increase after the studying the government policy more closely, however, Renault, is expected to increase up to 2 lakhs on its sedan Fluence, that is scheduled to be launched later this month in India. Land Rover, that recently launched sports utility vehicle Freelander 2 in India, is too expected to cost Rs 3-5 lakh more than the originally envisaged price tag, which would be in competition with BMW X1 on pricing.