Local assembly and sourcing make luxury cars easier on pocket
Automakers in the country such as Jaguar, Mercedes Benz, and BMW are taking fresh steps to ensure that their luxury models are priced lower to make them more attractive to the Indian buyer. These three auto majors are resorting to local assembly and procurement of engines and parts from within the country which in turn sees prices drop by INR 10-30 lakhs.
Price cuts being offered by luxury automakers in India have gone a long way in not only resulting in added response and better sales, but also in a notable increase in market share. Jaguar’s XJ sedan has seen a price cut of INR 25 lakhs to bring priced down to INR 91 lakhs, while Mercedes S Class 500 has received a price cut of INR 30 lakhs to a new price of INR 1.36 crores. BMW has also resorted to price cuts being offered on third generation X5 SUV which is now launched at INR 70.90 lakhs as against the outgoing model which sold at INR 80.90 lakhs.
While bringing in cars as completely built up units attracts a Customs Duty of 100%, local assembly involves taxes to the tune of just 30%. It is for these reasons that luxury automakers in the country are commencing local assembly at their plants while also resorting to other cost cutting factors such as building multiple models on one common platform and local procurement of engines and other parts.
Total luxury cars sold in FY13 stood at 28,000 which went up to 35,000 in FY14. Local procurement of engines from Force Motors has allowed both Mercedes Benz and BMW to pass on these benefits to the customer while the launch of a sub INR 1 crore car in India by Jaguar was possible only due to local assembly.