Luxury cars will become more expensive by up to Rs 3 lakh as disappointed automakers such as Mercedes Benz and Audi deciding to pass on increased duties imposed in the Budget today to consumers.
"The Budget is very disappointing for us. We were hoping for some reduction in taxes for large vehicles instead of hiking it further," Mercedes Benz India Director (Corporate Affairs and HR) Suhas Kadlaskar told PTI.
The premium car makers usually bring in advanced technology into the country and this step will be very counter productive, he added.
"We are going to pass on the additional burden to customers. We have not decided the exact amount yet, but on an average it will vary between Rs 2 lakh and Rs 3 lakh," Kadlaskar said.
Expressing similar sentiments, Audi India said it may hike the prices of its products in the country.
"The increase in excise and customs duty on large cars in this budget is very surprising. This increase comes at a time when the Indian automotive industry was finding favour with customers looking for better and efficient cars," Audi India Head Michael Perschke said.
The company may now re-evaluate its pricing strategy in India, he added.
Society of Indian Automobile Manufacturers (SIAM) said the vehicle makers were not expecting duties on large cars to go up in the Budget.
"While the auto industry appreciates that there was a compulsion to increase base rates of service tax and excise duty, the industry had hoped that the excise duty on large cars would have come down from 22% to 16% rather than going up," SIAM President S Sandilya said.
The 27% excise duty will lead to significant increase of tax for large premium cars, he added.
Sandilya, however, welcomed the move to impose higher customs duty on imported big luxury vehicles.