Luxury cars such as BMW, Audi, Mercedes, Jaguar and imported parts to get expensive: Here’s why

The Budget 2018 was announced on the first of February but left the automotive industry wanting in terms of guidelines for the intended 2032 EV shift. The Finance Ministry has put into effect the additional custom duties as proposed by the budget.

By: | Published: February 13, 2018 8:16 PM

The Budget 2018 left the automotive industry slightly unhappy, be it in the form of critical Electric Vehicle guidelines or even a revision in the GST norms with some additional relief from Post GST cesses. Instead, the govt announced a further hike in the rates of import duty, which aims to increase and expedite investments by companies in Make in India, effectively making them more expensive. However, the budget did not include any guidelines for Electric Vehicles or Hybrids. The government has put the budget directives into effect yesterday with directives from the Ministry of Finance to customs advising on the revised customs duties.
According to this revision, as proposed in the Budget 2018 by the Finance Minister Arun Jaitley, the customs duties on parts for cars not fully assembled in India is to be raised from 10 percent to 15 percent. To put this in perspective, most engines for luxury cars and their components are sourced from other countries and pieced together in India. The hike which will be in effect from 12th February, will impact the entire spectrum of luxury brands that chose the CKD route from motorcycles to Sports car, including the likes of Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Ducati and Triumph motorcycles. It is estimated that the price of cars will see a minimum revision of at least Rs 60,000 on cars costing north of the 20 lakh mark. Interestingly, engines being fully imported will also face a hike from 20% to 25%. Post union budget this will hold true for both cars and motorcycles. However, fully assembled cars or CBU cars and motorcycles will see no revision for taxation.
The inevitable price hikes have already begun post budget for most of the brands mentioned above and we expect this to continue as the revisions to the duties continue to roll-out.

 

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