Luxury Automakers Plan to Assemble Vehicles in India to Avoid Import Tax image

Luxury automakers try to boost sales in India by assembling the vehicles in this country.

As automakers have to pay a 100% import tax to bring luxury vehicles to India, they have decided to manufacture the cars here. Over the past year luxury auto sales in India have begun to increase, therefore automakers have begun to turn their attention to this market. Last year, luxury vehicle sales reached two times growth, while the sale of cars was moderate.

Luxury automakers, including BMW, Audi and Mercedes, have seen their sales increase considerably, as they offer various model for prices ranging under Rs. 30 lakhs. Currently, annual luxury car sales are around 25,000 units and analysts predict that they will reach 50,000 units by 2015. Automakers know that the vehicle price is crucial, and with the 100% tax the costs cannot stay down. For example, a car which costs Rs. 50 lakhs will increase to Rs. 88 lakhs after the taxes will be added.

As the taxes for imported parts are lower, automakers plan to import the parts and assemble the vehicles in India. Car build in this manner will costs less than Rs. 30 lakhs. Audi plans to begin assembling cars in India from June, including the A3 and other five models, while BMW is currently assembling three models, but will increase the number to six.