Many experts are asking the same question and huge speculation loom over the future of luxury car segment in India. Luxury car market is growing in India and in past few months we have seen many new launches in luxury car segment.
But this may be end of party or atleast a break for sure. As per new provisions in budget luxury cars may become expensive by over Rs 8 lakh or more. And worst hit will be entry-level cars of the companies like BMW, Audi and Mercedes.
The new provision indicated the jump in the prices India-assembled cars. “A definition for ‘CKD unit’ (Completely knocked down car / bike /automobile is one which is imported or exported in parts and not as one assembled unit) of a vehicle, including two-wheelers, eligible for concessional import duty is being inserted to exclude from its purview such units containing a pre-assembled engine or gearbox or transmission mechanism or chassis where any of such parts or sub-assemblies is installed,” the Budget provision said.
In simple terms, this implies that auto companies that are doing CKD business in India with fully-imported pre-assembled critical parts like engines or gearbox or transmission cannot claim the lower 10% import duty on them as these will no longer be defined as CKDs. This would bring these vehicles on a par with fully-built units and thus slap a hefty 60% import duty on them, which would go up to 110% after the addition of counter-vailing duty, VAT and other local levies.
Reportedly team of effected companies will be meeting finance ministry to seek clarification on the matter. While there still is no clarification on the matter but most agree on the decline in sales due to huge increase in input price.
India has immerged as one of the fastest growing countries for companies like BMW, Mercedes and Audi though absolute sales number are not huge. The total market for luxury cars was about 18,000 units last year, and is expected to double in the next two-to-three years if the lower duty regime stays.