The Indian luxury car consumer has much reason to cheer. Prices of luxury vehicles are set to dip as a number of car makers are now equipped to assemble cars locally, besides being able to source critical components as well as engines from within the country. With this domestic sourcing, prices of a number of luxury cars are set to witness a drop of INR 10-30 lakh over the
last few months.
For instance, Jaguar, owned by the Tata group, was able to slash INR 25 lakh off the price of its 3.0-litre XJ sedan. This brings the cost of this high-luxury vehicle down to INR 91 lakh. Similarly, purchasing the Mercedes S Class 500 could now save you up to INR 30 lakh with the price being brought down to INR 1.36 crore. Similarly, the BMW X5 saw an INR 10 lakh price cut.
Jaguar was able to bring down prices by carrying out assembly locally at its plant in Pune and by effecting cost savings by using a single platform to build multiple models. In India, the import of fully-built cars is subject to a 100% customs duty or more in some cases. However, a car that is locally assembled is required to pay an average of 30%.
According to market estimates, sale of luxury cars in FY13 was 28,000 and in FY14 it touched 35,000. German luxury automobile companies such as BMW and Mercedes-Benz have been sourcing engines for some of their models from commercial vehicle manufacturers such as Force Motors. This move has gone a long way in curtailing costs and passing on the ultimate price benefit to customers.