GST impact: Mercedes-Benz cuts prices of Made in India cars by up to Rs7 lakh
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Mumbai: Mercedes-Benz India Pvt. Ltd on Thursday said it is reducing the prices of all locally made cars to align with prices in the goods and services tax (GST) era—the first carmaker company to do so.
In a statement, India’s largest luxury car maker said, “The price revision on a weighted average of 4% will be effective immediately, and is aimed at providing value to a customer’s purchase decision before GST implementation.”
The price reduction on such models ranges from 2% to 9% depending on the tax structure and local body taxes of the state. The weighted average of this is a price reduction of 4% on transaction prices of customers, it added.
Mercedes-Benz India locally assembles nine models, including the CLA sedan, sports utility vehicles GLA, GLC, GLE and GLS, luxury sedans C-Class, E- Class, S -Class and Maybach S500, which are priced between Rs32 lakh and Rs2 crore (ex-showroom, Delhi). The price reduction will range from Rs1.4 lakh on the CLA sedan to Rs7 lakh on the Maybach S500.
Under the current duty structure, a buyer of a luxury car or any other big car, including SUV, pays a total duty of up to 55% of factory gate price (including 27% or 30% excise duty, a 12.5-15% value added tax, or VAT, on base price plus excise and other cesses, 1% national calamity contingency duty, 1.8% auto cess, 1-4% infrastructure cess, and another 4% octroi/local tax in states such as Maharashtra).
With the maximum cess on luxury cars at 15%, and with a GST rate of 28%, the maximum duty one is likely to pay is 43%. All the other cesses and local duties get subsumed within the GST.
Roland Folger, managing director and chief executive at Mercedes-Benz India, said the move is “to ensure complete peace of mind for its customers.
“We have decided to pass on the GST tax benefits at an earlier stage at our cost. This approach will benefit the customers who want to purchase a locally produced Mercedes-Benz from now on and during the month of June,” said Folger.
The impact on the prices of imported models is yet to be evaluated. The implementation of the GST structure will support the ease of doing business in India and help in the growth momentum of the luxury car industry, Folger said.