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Indian luxury cars, SUVs to cost more on 25% cess jolt

Luxury cars and Sports Utility Vehicles (SUVs) will be costlier in India as the central government has cleared an ordinance to hike the maximum cess on vehicles from 15 percent to 25 percent.

In fact the price of both luxury cars and SUVs became cheaper under the new Goods and Services Tax (GST) system that was implemented on July 1. It may be noted that even some of the most premium models got a price cut of up to Rs 10 lakh.

The post-GST price cuts has driven the sales in July with Utility Vehicle numbers jumping significantly by 35.52 percent to 86,874 units while the cumulative Passenger Vehicle numbers also touching their best-ever 298,997 units, recording an increase of 15.12 percent.

The current move of increasing cess is expected to adversely impact SUV and luxury car makers like Mahindra & Mahindra, Toyota, Mercedes, BMW, Audi and JLR.

The Indian auto analysts said the decision may put breaks on the growth plans of the luxury car industry that had seen a flat performance in 2016 due to various reasons including demonetization and the ban on 2,000cc diesel cars in the National Capital Region for the first eight months of 2017.

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