Mercedes Benz India has announced that its Cars and SUV’s in India will get costlier by up to 3% from August. The German Luxury car manufacturer has increased prices from Rs. 90,000 to Rs. 5.5 lakhs (ex-showroom prices). The price adjustments are being made to offset the rising input costs.
Mercedes Benz stated that the reason for the price hike was in rising input costs, including an increase in customs duty on automotive parts and the increase in the excise duty and cess on fuel.
Martin Schwenk, Managing Director, Mercedes Benz India said, “We were left with fewer options, but to make some necessary price adjustments to our product range at the moment to offset the impact of rising input costs”.
Luxury car segment in India saw a sales slump to a decade low in the first half of 2019, due to various reasons including the slowdown in the economic activity, rising input costs and increase in the taxes announced in the budget.
Finance Minister, Nirmala Sitharaman, in her maiden budget speech, had announced the increase in customs duty on imported luxury cars with a seating capacity of up to 10 persons from 25% to 30%.
The Government also increased the duty from 2.5% to 7.5% of parts including windscreen wipers, defrosters, demisters, sealed beam lamp units, parts of visual or sound signalling systems, horns, intake air filters, oil or petrol filters, catalytic converters, vehicle locks, glass mirrors, and friction material.
Mercedes Benz is working on innovative financial offerings to ensure easy accessibility to the prospective buyers like STAR Agility+, STAR Finance, STAR Lease, Corporate STAR Lease, etc in the country.
Audi India is also considering a price hike in India, in September.
Rahil Ansari, ex-Head of Audi India, had said earlier on the matter of price increase, “The budget proposals clearly put pressure on our input cost. While we are trying to reduce the impact through certain measures, the price cannot remain untouched. In a market environment where the sale was already under pressure, this will be another setback”
However, not all automakers are comfortable to increase prices due to the pressure of declining sales. According to the report, BMW India, JLR India and Volvo India have said that they have no plans to increase vehicle prices.