Luxury Carmakers Like Mercedes-Benz and Audi Await GST Clarity, Hope for Festive Season Sales Boost

Luxury car manufacturers in India, including Mercedes-Benz, Audi, and BMW, are eagerly awaiting clarity on the proposed revised GST rates for automobiles. With the festive season approaching—a key sales period for the auto industry—manufacturers believe that early clarity on GST changes is crucial to revive market momentum and encourage customer purchases.

GST Uncertainty Dampening Immediate Demand

Prime Minister Narendra Modi recently indicated that the government is working on a simplified GST regime, which may reduce tax rates for both mass-market and luxury vehicles. However, with the GST Council, chaired by Finance Minister Nirmala Sitharaman, scheduled to meet on September 3-4 to discuss a dual-slab GST structure, final decisions on revised rates are still pending. This uncertainty has led many buyers to adopt a “wait-and-watch” approach, causing a slowdown in new vehicle bookings.

BMW Group India President and CEO Hardeep Singh Brar told PTI that speculation around GST changes has caused consumer indecision, delaying purchase decisions and affecting sales. “Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector’s contribution to economic growth during this quarter is robust,” Brar emphasized.

EVs in Focus: Automakers Urge Continuation of Low GST on Electric Vehicles

Brar also highlighted the importance of retaining the current 5% GST on all passenger electric vehicles to sustain the momentum toward electric mobility in India. Any adverse changes, he cautioned, could impact the country’s push for higher EV adoption and local manufacturing.

Positive Outlook from Carmakers, But Clear Policy Needed

Audi India Head Balbir Singh Dhillon expressed optimism about the upcoming festive period, expecting that GST clarification in early September will boost consumer confidence and drive demand—particularly for their SUV models. He said Audi is prepared with an exciting product range to cater to customer needs this season.

Mercedes-Benz India MD & CEO Santosh Iyer shared that the brand is gearing up for the festive season with a new campaign, aiming to tap into positive consumer sentiment and a refreshed vehicle portfolio. “We expect this festive season to bring in impetus and drive sales as this is the right time, owing to positive customer sentiment and a refreshing new portfolio on offer,” Iyer noted.

What’s Next?

Once the GST Council announces the revised rates—expected after its September 3-4 meeting—luxury carmakers hope for a quick return to strong sales and a positive end to 2025’s festive quarter. Until then, both buyers and automakers remain in anticipation.