Higher Taxes, Other Levies Hurting Luxury Car Sales, Says Audi India Head

High goods and services tax rates, import duties and registration taxes are limiting the growth of luxury car market in India and the government must consider reducing these in the upcoming budget, according to German luxury carmaker Audi.

The company, which saw 28.92 percent year-on-year decline in sales at 4,594 units in 2019, said every major player in the luxury segment saw a drop in sales last year and government support would help in overcoming the downturn.

“Luxury car sales are impacted by high GST rates, import duties and registration taxes, which is limiting the segment to a mere 1.2 percent of the overall car market; when compared to other global markets,” Audi India head Balbir Singh Dhillon said.

“Every major luxury car player has de-grown in volumes during 2019,” he said.

Indian luxury car market comprising top five players — Mercedes, BMW, Audi, JLR and Volvo — witnessed a total sales of 40,340 units in 2018 and is expected to see a decline in 2019. Some of the companies are, however, yet to release their up to date sales data.

Luxury car market leader Mercedes Benz had reported an 11.28 percent yea-on-year decline in retail sales at 13,786 units in 2019, while German compatriot BMW reported a 13.8 percent dip in its sales at 9,641 units in India last year.

Stating that the government has placed a definitive emphasis on electric vehicles, Dhillon, however, said setting up of necessary charging infrastructure was key to the success of the EV-centric ecosystem.

“It is also worthwhile to mention that plug-in hybrid vehicles should also be encouraged with lower GST, import duties and registration taxes. This will encourage customers to take the first step towards plug-in hybrid electric vehicles and eventually move to electric mobility in India,” he said.