GST impact: Luxury carmakers begin cutting prices

Key highlights:

• JLR on Tuesday announced price cuts with immediate effect on their cars
• Ford India cuts prices on EcoSport, Aspire and Figo
• Mercedes-Benz and BMW were the first to pass on the price benefit to customers

Luxury cars were expected to get cheaper post GST (Goods and Services Tax) but companies like Mercedes India, BMW and Janguar and Land Rover (JLR) have already announced price cuts. 

On Tuesday Tata Motors-owned Jaguar Land Rover (JLR) reduced the prices of select models by up to Rs 10.9 lakh from immediate effect. This it said was in order to pass the benefits of the new GST rates to be rolled out in July.

The company said that the estimated price reduction post GST will be up to 12% and will vary from state to state on a model-wise basis.

This means that the price of the Jaguar XE sedan could reduce in the range of Rs 2 lakh to Rs 5.7 lakh and could reduce by Rs 4 lakh to Rs 10.9 lakh on the Jaguar XJ, depending on state to state.

The Land Rover Discovery Sport and the Range Rover Evoque could see prices cuts in the range of Rs 3.3 lakh to Rs 7.5 lakh.

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These cars are currently priced between Rs 37.25 lakh to Rs 1.02 crore (ex-showroom Delhi).

Rohit Suri, President and Managing Director of JLR India said the price reduction to customers will be with immediate effect, but it will be valid only for June in case GST isn't implemented by July 1.

Ford India too announced discounts of up to Rs 30,000 on its compact SUV EcoSport, sedan Aspire and hatchback Figo.

Even new entrant Isuzu Motors India is offering discounts of up to Rs 1.5 lakh on its models such as the newly launched MU-X and the V-Cross.

Mercedes-Benz India last week announced that it will reduced the prices of its luxury cars by 4% on an average. The price reduction of the entire ‘Made in India’ portfolio ranges from 2% to 9% depending on the tax structure and local body taxes of the state, said the company.

This would bring down the prices of the cars in the range of Rs 1.25 lakh to Rs 7 lakh for those that are locally assembled in India.

ALSO READ: Mercedes-Benz cuts car prices by an average of 4% to pass on GST benefit to customers

Roland Folger, Managing Director & CEO, Mercedes-Benz India commented, “As a customer centric initiative, we are now passing on the benefits of post-GST pricing of our ‘Made in India’ cars with immediate effect. To ensure complete peace of mind for our customers, we have decided to pass on the GST tax benefits at an earlier stage at our cost.”

Even the second largest luxury car manufacturer BMW at the same time announced an immediate reduction in prices of its cars. The company however did not give the details of reduction in the prices.

The government has announced the base GST rate of 28%, which is lesser for larger vehicles. However, there is an additional 15% cess levied on large cars including luxury vehicles. This brings the GST rate on luxury cars to 43%.

Despite the additional cess the tax on luxury cars is much less than the current rates which are between 47-53%, depending the states.