Luxury car buyers lose most GST 2.0 benefits
Luxury car manufacturers such as Mercedes-Benz, BMW, and Audi have experienced a significant reduction in the benefits of a recent GST 2.0 cut. This reduction initially led to lower vehicle prices, but the effects have been largely eroded by subsequent price hikes. The GST rate cut, which reduced the tax on luxury cars from 48-50% to 40%, initially lowered prices by 6.5-7.5%.
However, this reduction has been mostly offset by the manufacturers' price hikes, resulting in a loss of about five percentage points of the initial tax benefit. Despite this, luxury car sales are projected to grow by 11% in 2026, reaching around 58,000 units. Luxury car sales, which make up only 1% of India's total car sales, are expected to grow by 11.2-11.5% in the first nine months of 2026.
However, this growth is anticipated to be slower than the broader Indian passenger vehicle market, which is projected to expand by 13-14% in 2026.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
