Custom Duty Increased To Hike Luxury Car Prices- Budget 2018

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The 2018 Union Budget of India has brought some bad news for luxury car buyers in the country. The budget draft has proposed an increase in custom duty on luxury cars and motorcycles , those which are not fully made in India, but built by using kits manufactured outside the country and assembled here. Whereas, all the cars and bikes that are completely manufactured in India will remain unaffected. Have a look at the 2018 Union Budget.

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The prices of cars that are imported as completely built units are set to go up as well.  The custom duty on completely knocked down (CKD) kits is set to up to 15 per cent from the current 10 per cent. Meanwhile, completely built up units (CBU) will be charged a custom duty of 25 per cent, which is up by 5 per cent when compared to the current taxation structure. The move will affect luxury cars produced by brands such as Audi, BMW, Jagaur Land Rover, Lexus, Mercedes-Benz and Volvo among others.

The head of Audi India, Rahil Ansari, also stated that “For the luxury auto sector, the Union Budget 2018-19 is disappointing and is against the spirit of partnership. As manufacturers, we have a core social responsibility towards our workforce and the dealer network.”

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Check out the estimated the price premium that luxury cars are likely to see:

Car Model Estimated Price Hike (Ex-showroom Cost)
Hyundai Tucson Rs 90,000 to 1.25 lakh (Rs 18 lakh to Rs 25.50 lakh)
Audi A4 Rs 2 lakh to Rs 2.50 lakh (Rs 39.97 to Rs 45.45 lakh)
BMW X1 Rs 1.50 lakh to Rs 2 lakh (29.9 to 40.99 lakh)
Volvo S90 Rs 2.90 lakh to Rs 3 lakh(Rs 57.90 lakh)
Mercedes-Benz E-Class Rs 2.80 lakh to Rs 3.90 lakh (56.47 to 77.11 lakh)


Roland Folger, MD & CEO of Mercedes-Benz India also expressed his sentiments and has stated that “The increase in the basic customs duty of auto parts, accessories and CKD components is unfortunate, and comes as a surprise. It will highly restrict the growth of the luxury car industry.”


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