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Despite high taxes, Indians are fond of luxury cars (Part.2)

Many luxury car brands such as Lamborghini, Mercedes, BMW & Porsche reported their highest-ever numbers in India in 2022. Despite no respite in the country's high taxes on imported high-end cars, increasingly successful young Indians are spending on luxury goods and services.

Shilpa Dhamija

By Shilpa Dhamija25 mai 2023

Boopesh Reddy, a wealthy businessman based in Bangalore, India, next to his sports car collection (Boopesh Reddy)

India has one of the highest tax regimes in the world for imported CBU (completely built units). "All imported cars or CBUs above CIF value (cost, insurance, and freight) of 40 000 USD attract 110% basic customs duty in addition to up to 50% GST (goods & services tax) in India", explains Santosh Iyer, MD & CEO, Mercedes-Benz India. Over and above these taxes are a bunch of other variable taxes - like road tax and registration costs that are applied after the CBU is imported into India.

Bollywood actor Kartik Aaryan with his McLaren GT (DR)

Luxury sports car maker McLaren opened its first dealership in India late last year with Infinity Cars, one of India's leading luxury car dealership groups that also sells Lamborghini & Porsche cars. Its chairman and managing director, Lalit Choudary, explains how India's high import taxes impact the price of a luxury sports car for a buyer in India "If a McLaren GT costs about £100K retail price in the UK when imported to India as CBU, it may cost around £300K or £320K including just the freight and import taxes".

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But why does India have such high taxes? "CBUs imported into India have more taxes because our country wants to promote local manufacturing." reasons Renuka Kriplani, a veteran auto journalist from India. Elon Musk shelved plans to launch Tesla in India late last year after several failed attempts to score lower taxes (according to a report by Reuters). The EV brand wanted to test the Indian market by importing EVs built in the US and China on discounted import taxes before setting up a plant in the country. "I don't think our government is wrong in not offering sops to Tesla. They are saying if you want to come here and set up a plant, you will get the same duty rebate as the rest of the brands", she adds.

The changing dynamics of India’s premium vehicle demography

Sports car collector Boopesh Reddy at his home in Bangalore (Boopesh Reddy)

Are high taxes a speed bump for luxury car buyers in India? "Not for true auto enthusiasts," answers Boopesh Reddy (Brengarage on Instagram), an entrepreneur & sports car collector with one of India's most envy-worthy car collections. "When something is your passion, you will invest in it even if it is expensive. Of course; it pinches when you compare the costs with other countries". Reddy's carefully curated collection includes the limited edition Mercedes-Benz AMG GT Black (only 1 700 in the world), Ferrari 488 Pista Spider, and Lamborghini Aventador SVJ, to name just a few. "It took me a while to gather the courage to start buying these cars," he confesses, "I always thought, what will society say and what will my parents think? Am I spending too much money on performance sports cars or luxury cars?"

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