India-UK FTA won’t change luxury car industry much: Mercedes India MD – Car News

India-UK FTA may lower import duties on luxury cars, but Mercedes-Benz India MD says impact will be limited as 95% of their vehicles are locally assembled. Most luxury car sales involve CKD units, already taxed at 15%, minimizing the agreement’s influence on the broader market.

India’s free trade agreement (FTA) with Britain won’t cause any dramatic change to the luxury car industry as most of such vehicles are partially manufactured here anyway, said the head of India’s largest luxury carmaker Mercedes Benz.

With tax concessions to British brand Jaguar Land Rover (JLR) now becoming a possibility under the FTA signed between the two countries earlier this week, it directly means steeper competition to Mercedes-Benz India (MBIL).

Speaking to FE, Santosh Iyer, managing director, MBIL said, “We welcome any FTA. 95% of the cars we sell in India are locally produced, attracting 15% of duty. Under FTA, there is no zero duty and there are quotas.”

“Only very niche cars are imported into the country. These cars will have better pricing opportunities but that’s a very small segment. Most carlines in India are CKD (completely knocked down), anyway at 15% duty,” Iyer added.

BNP Paribas Exane estimates suggested that the likely revised duty of CKD units under the FTA will be 11.5%, as against the current effective customs duty rate of 16.5%, which is made up of 15% basic customs duty and 1.5% social welfare surcharge.

Vehicles priced above $40,000 which will be fully imported in India will see a revised duty of 50% from the current 110%. Vehicles priced below $40,000 will see their rate likely being slashed to 10% from 70%.  

With the exception of the Defender, all other models of JLR are made at the UK plants. At its Pune-based India factory run by Tata Motors, JLR produces the Range Rover, Range Rover Sport, Range Rover Evoque, Range Rover Velar, and Discovery Sport through the CKD route.

“While we find the lower import tariff exciting, we see limited impact of the FTA on the industry structure and incumbent OEMs,” Kumar Rakesh, analyst, BNP Paribas Securities India, stated in a report.

Mercedes-Benz on Friday announced plans to hike prices of its cars to offset forex and input cost pressures. The increase of 3% will be carried out in two stages on June 1 and on September 1. Price corrections will range from Rs 90,000 for a C-Class to Rs 12.2 lakh for the Mercedes-Maybach S 680.

 “At the start of the year, we had predicted the growth for the year to be flat. The luxury car market will have a single-digit growth and it should be a flattish year. The industry had seen volumes of 50,000-51,000 in 2024 and this year it should remain at that level,” Iyer added.

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This article was first uploaded on May nine, twenty twenty-five, at thirty-five minutes past eight in the night.

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