Luxury car-makers call for cut in duties to increase sales

The demand for lowering duties on cars has become more pronounced with German luxury car maker Mercedes Benz and even the Volkswagen Group, which controls two volume car brands —Volkswagen and Skoda — joining the demand of super luxury carmakers.

Volkswagen Group, Europe's largest car maker and Mercedes Benz, currently India's second largest luxury car manufacturer, and Italian supersports car maker Lamborghini want the government to lower duties on cars.

Volkswagen had put its expansion plans in India on hold due to the 2011-13 market slowdown and a poor showing of its volume brands. "We started off well but lost track in the middle due to forces that were beyond our control," said Thierry Lespiaucq, managing director, Volkswagen Group sales India. "The slowdown impacted everybody and the currency fluctuation did not help. At the same time import duties went up... The situation has improved with the new government and we are ready to invest again, but bringing in the GST will help us make up our minds."

At over 150%, cumulative duty on imported cars in India is among the highest in the world.

Mercedes said it would have grown faster than 16% so far this year had taxes not been kept at an artificial high. The company plans a slew of launches next year.

"Taxes in India are higher than most other major markets in the world and that does restrict the growth of the industry," said Till Conrad, chairman, Mercedes Benz India.

Lamborghini's president and CEO Stephan Winkelmann had said last week that high import duty is the main burden for selling vehicles in India.

"In 2011, the customs duty was 60% and the basic customs duty now is 100%, which ranges up to 167%," he said in Bangalore. "If the taxation is going down and the sales are going up, the government is earning more."

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