September 14, 2025

Hold your breath, car lovers! The latest GST rate cut is like a turbo boost for Mercedes-Benz India. Santosh Iyer, MD and CEO of Mercedes-Benz India, says this festive season could be their “best-ever” thanks to cheaper prices. The twist? Road taxes, slapped by states, need a cap to make sure savings reach buyers' pockets. In a lively chat with PTI, Iyer welcomed the GST rate cut, which slices prices by 6 to 8 percent. “The GST cut will definitely have an impact on demand in the short run,” he said. Customers who delayed buying in August are finally ready to roar back. But hold on – there’s a twist in this tax tale. India’s states charge their own road taxes, between 15 to 22 percent, which hinders the full advantage of the GST cut. Iyer said, “At some point, even the road taxes across states and India need to be uniform, and it may be capped at certain levels, else the GST benefit will never reach the end-consumer.” With no guarantee that state taxes won't rise further, prices could still stay high. India’s new GST rules set a flat 40 percent tax on luxury cars (those over 1500cc or 4 meters long), replacing the extra compensation cess. Though the GST rate is higher than earlier 28 percent, removing the cess overall reduces the tax load. Iyer also praised the consistency of the 5 percent GST rate on battery electric vehicles. On the luxury car business, he gave a glimpse of amazing growth: In the last six years, Mercedes has sold one lakh cars in India, out of a total two lakh over 31 years! This boom aligns perfectly with rising incomes—from USD 1,550 to USD 2,500 per capita in 10 years. Looking ahead, Iyer predicts steady, double-digit growth, not a sudden spike. He said, “We don't see a hockey stick kind of growth, but sustainable growth should take us to much higher numbers in the next five to 10 years.” Though still small compared to countries like China, India’s luxury car market is speeding up. The Stuttgart-based giant is also rolling out fresh models globally and plans to bring many soon to India. "We are producing multiple cars in Pune," Iyer revealed, adding they have invested over Rs 3,000 crore and have enough capacity for the future. About the India-EU free trade agreement (FTA), Iyer said Mercedes-Benz supports it fully, seeing FTAs as the next big step after GST reforms. “FTAs will facilitate two-way trade,” he said. With 90 percent of their India sales locally made, imports will also get priced competitively. Adding to this, Mercedes-Benz Group AG’s board member Mathias Geisen told PTI they will continue investing heavily in India, a "priority market," regardless of the FTA’s outcome. The EU is India’s biggest trading partner with USD 135 billion in goods trade last year. So, buckle up! The GST cut is just the start. With smart policies on road tax and roaring economic growth, the luxury wheels of India will race faster and wider in the coming festive seasons.

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Tags: Gst rate cut, Mercedes-benz india, Luxury cars, Road tax, India automotive market, India-eu fta,