Stories
Luxury Car GST Relief Fades: Prices Return to Pre-Tax Levels
- •Luxury car prices, initially reduced by 5-7% due to GST rationalisation, have largely reverted to pre-tax levels within a year.
- •Mercedes-Benz GLA 200 and BMW X3 xDrive20d M Sport now cost as much as or more than their prices before the GST changes.
- •Luxury carmakers attribute price increases to a weakening rupee against the euro, rising logistics, and higher operating costs.
- •Audi India has increased prices twice this year, totaling around 4%, after an initial 6-7% reduction post-GST.
- •Mercedes-Benz India and BMW Group India have also implemented multiple price revisions, citing currency depreciation and escalating costs.
Key Questions Answered
Successive price increases by luxury carmakers like Mercedes-Benz, BMW, and Audi have eroded the initial savings from the GST cut. These revisions were driven by a weakening rupee against the euro, rising logistics expenses, and higher operating costs.
German manufacturers face high exposure to currency fluctuations due to their heavy dependence on imported vehicles and completely knocked-down kits sourced from Europe. A depreciating rupee against the euro increases procurement and manufacturing costs, prompting brands like Mercedes-Benz and BMW to raise prices.
Mercedes-Benz increased prices by 2 percent in January and another 2 percent in April, with a further 2 percent revision scheduled for October 1, 2026. BMW Group India increased prices by up to 2 percent on April 1 and implemented an additional 2 percent increase on July 1, 2026.
