Volkswagen Financial Services- 11 Aug 2017

Why Now Is the Best Time to Buy a Luxury Car

There is gladdening news for one and all, the GST has just made buying luxury cars relatively cheaper. While state taxes may differ, the GST has definitely made it cheaper. Luxury cars and SUVs are now more affordable than ever before. In fact, most believe that the Goods and Service Tax may drive double digit growth for the car manufacturing industry. While the change has barely been visible for small and medium segment of cars, the luxury, SUV and electric car segments have gotten a huge boost.

The Difference

For cars longer than 4 meters and with an engine of over 1500 cc capacity, the pre-GST rate was 51.80%. From this, the GST has brought this to 43%, a decrease of 8.80%. The 28% base rate plus the 15% cess, that is 43% GST is also applicable to SUVs. This is good news for anyone looking to buy that big muscle car they’ve always wanted, since the original rate pre-GST were 55.30%.

There has been a high degree of positive response to the implementation of GST among car manufacturers. The lowering of prices will bring with it an increased demand for luxury cars, and that will in turn boost the industry even further. The sales of luxury car models declined in 2016, and this is reduction of prices is expected to boost the same.

The Benefits of GST

One of the biggest problems of buying a luxury car was that often the rates of the car varied from dealer to dealer. This exercise of ‘one nation one tax’ will bring an end to the price disparity for the same model that buyers had so often experienced. This will however, not change that each state will levy their own taxes and that can vary from state to state. In a nutshell, while the ex-showroom price of cars may equalize across the country, the on-road price may still vary.

Electric Cars Get Cheaper

Electric cars are, what many consider, as the future of the industry. With fossil fuels on the wane, electric cars and smart cars have become the next big target. The government also slashed the current taxes on electric cars, in fact, this is the biggest cut among any segment in the car industry.

Servicing and Spares May Get Expensive

While the overall car market might be facing a boom, there is just the hint of a grey smudge on the horizon. The cost of spares, especially of luxury cars may get more expensive, however, clarity on that is still to come through. The servicing charges also may see a spurt in the light of the GST.

This can however, be offset by manufacturers that are looking to pass on the benefits of GST to the customers. The change in prices is accompanied by a season of offers and discounts which includes cut rates for servicing. All of this brings us to an overall pleasant picture of the luxury and SUV car segment in India.

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