Several luxury carmakers are offering price reductions and financing schemes on locally manufactured cars to build momentum ahead of implementation of GST in anticipation of lowering of taxes levied on the segment. The companies want to attract prospective buyers who may wait till July 1 for buying a car. This, may hurt the sales in the interim period, which the companies want to counteract by offering lucrative deals.
Mercedes Benz cut the prices of its entire range of Indian made cars by 4%; BMW is offering a slew of attractive services to its customers such as financing at 7.90%, assured buyback for 4 years, free insurance for the first year and car maintenance for a period of 3 years.
The GST Council had placed SUVs and cars in the highest tax bracket; 28% plus additional cess of 1-3% on small cars and 15% cess on luxury cars. Currently, taxes on luxury cars are levied at 55% which would see a drop of 12% of tax incidence. This is a huge positive for luxury carmakers.