Mercedes Benz, Audi Set to Increase Prices

New Delhi: Following the hike in excise and customs duties in the Budget for 2012-13, luxury vehicles in are set to become more expensive by up to 3 lakh, as automakers have decided to pass on the additional burden. Premium vehicle makers, including Mercedes Benz and Audi, have decided to increase the prices of their vehicles and are currently finalizing the exact amount of hike, while BMW is evaluating its options. "We are going to pass on the additional burden to customers. We have not decided the exact amount yet, but on an average it will vary between 2 lakh and 3 lakh," Mercedes Benz India Director (corporate affairs and HR), Suhas Kadlaskar said. The premium carmakers usually bring in advanced technology into the country and this step will be very counter-productive, he added. "The Budget is very disappointing for us. We were hoping for some reduction in taxes for large vehicles instead of hiking it further," Kadlaskar said. At present, Mercedes-Benz manufactures its C, E and S Class luxury sedans in India. The existing prices of these cars vary between 26 lakh and 1.01 crore. The other models that the comapny sells here through fully imported route are ML-Class, GL-Class, E-Class Coupe, E-Class Cabriolet, R-Class, SLS AMG, AMG-Series and Maybach. As per its website, these vehicles are available between 45.39 lakh and 5.85 crore. Another luxury carmaker Audi India also said it may hike the prices of its products in the country. "The increase in excise and customs duty on large cars in this budget is very surprising. This increase comes at a time when the Indian automotive industry was finding favour with customers looking for better and efficient cars," Audi India Head, Michael Perschke, said. The company may now re-evaluate its pricing strategy in India, he added. Audi also assembles some its premium models in India. These are sedans A4 and A6, and sports utility vehicle Q5. The prices of these vehicles start from 27.7 lakh. The company also imports other models such as A7, A8, Q7, RS5 and R8. The prices of these cars start at 55.35 lakh. Finance Minister, Pranab Mukherjee, had announced hiking the basic customs duty on imported vehicles valued over $40,000 and with engine capacity of over 3,000 cc and 2,500 cc for petrol and diesel driven vehicles respectively to 75 percent from 60 percent. Another luxury carmaker BMW, however, said it has not taken a decision on passing on the burden to consumers. "We have not decided about the price increase yet. We finalise our startegy next week whether we will pass on the additional burden to consumers or not," a BMW India spokesperson said. In the Budget excise duty on cars have been also increased. Petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc but the length exceeding four metres to 24 percent from 22 percent and a fixed duty of 15,000. Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc respectively will now be charged with an ad valorem duty of 27 percent, instead of the earlier 22 percent and a fixed duty of 15,000. The 27 percent excise duty will lead to significant increase of tax for large premium cars, Society of Indian Automobile Manufacturers (Siam) President, S. Sandilya, said. He, however, welcomed the move to impose higher customs duty on imported big luxury vehicles. "The increase in customs duty on cars and MUVs, valued above $40,000, from 60 percent to 75 percent seems to be a step to encourage local manufacturing, value addition and employment," Sandilya added.