Santosh Iyer, the Managing Director and CEO of Mercedes-Benz India, has confirmed that the prices of luxury cars are slated to decrease by 5-8% due to the implementation of new Goods and Services Tax (GST) regulations. The GST for electric vehicles (EVs) will remain at 5%, ensuring no change for these models. However, vehicles with combustion engines, including strong hybrids, will see a reduction in their price. Iyer stated that, previously, the tax on combustion engines, including cess, ranged from 48% to 50%, whereas strong hybrids were taxed at 43%. The standardization now sets the rate at 40%. Mercedes-Benz is currently calculating the revised pricing, and a new price list is anticipated to be published soon. Iyer mentioned that the price impact will likely be between 6-8%, with the company aiming for a late-night release. He described the new GST reforms as “much simpler,” indicating that the government is clear with its policy; EVs maintain their preferential rate, and ICE vehicles are grouped with hybrids. Although the new system is simplified, worries exist about the dealer’s inventory. Dealers may lose around Rs 2,500 crore due to older stock being taxed at a higher rate. The finance ministry is aware of the situation and will likely announce a solution soon. Despite this issue, Mercedes-Benz is optimistic about achieving its “best-ever festive season,” anticipating stronger demand and reduced prices. However, Iyer also warned that fluctuating exchange rates could affect the tax cut’s impact. He noted that the euro to rupee exchange rate has been unfavorable, which impacts imported components. He cautioned that while prices will drop initially, there might be upward pressure in the upcoming months if the exchange rate stays at its current level.
Luxury Car Prices in India to Decrease by 5-8% Due to GST Reforms, Says Mercedes-Benz India
