Audi says high taxes an obstacle in growth of luxury car segment in India

German automaker Audi has said that high taxation has become a hindrance to the growth of the luxury car segment in India and the government should look into lowering the levies to help the sector to grow. Luxury vehicle sales account for less than 2 per cent of the overall passenger vehicle sales annually and the former segment has been more or less at the same level for the past decade, Audi India head Balbir Singh Dhillon told PTI.

He revealed the status of the sales of luxury vehicles in the country and how it has remained in the slow lane for years. “While the volume segments have been growing all these years, the luxury segment went up to 40,000 units a year and stayed in that range and this year we can end up even lower than that," he said. He added that apart from the 28 per cent GST, luxury cars also come with cess and therefore requested the government to reduce the duties.

Dhillon conveyed that expenditure does not end here as there is high registration cost in some of the states and the rising fuel cost is also taking the total cost of ownership to a higher level. “So, if this cess part is taken off and also if the registration costs are kept reasonable and same across the country, it will help the segment," he said. Premium vehicles currently come with a 28 per cent GST slab with an additional cess of 20 per cent on sedans and 22 per cent on SUVs, which take the total tax incidence to up to 50 per cent.

Audi Q5 SUV is all ready for its launch next month. It will come with five drive modes with one specifically for light off-roading.

Dhillon added that India is one of the countries where taxation is the highest. “Our request is to standardise the taxation structure because our customers are very well travelled and they know that the same models which we are selling here at higher cost are much more affordable in other countries," he elaborated. He further informed that this layering of taxes is challenging for the segment and hence it needs some support, noting that high vehicle costs demotivate customers from upgrading to the luxury segment.

Dhillon also highlighted that Audi India needs to have a positive business case in the electric vehicle segment to impress its global headquarters to roll out fresh investments for local manufacturing of electric cars in the country. The company has already driven in five imported EVs in the country and needs to show some level of volumes to prove to its headquarters that the market is ready to adopt environment-friendly mobility solutions. “Once we know that these cars are well accepted in the market, we can go to the headquarters to tell them that we need to now produce locally," he added.

Audi has already introduced eight models this year in India and is now all set to launch the new Q5 SUV in November.