Luxury carmaker Mercedez Benz sees India as a land of missed opportunities as the country has a lot to offer but frequent policy changes, such as demonetization and the goods and services tax (GST), have derailed potential sales growth.
Mercedes Benz MD and CEO in India Roland Folger has noted that for every car sold in India, seven were sold in China. And when it comes to the luxury segment, China sells 53 cars for every one sold in India, the Business Standard reported
Folger said that in 2016 Mercedez Benz sales declined 2% to 13,231 cars owing to a green cess (levy) on diesel cars above 2000cc capacity and the subsequent demonetization of high-value currency notes.
The company expected GST to reduce complexity in taxes, but it also created many levels of taxation for cars and imposition of a cess of 25% for luxury cars further complicated things.
In the recent Budget by India’s central government, the customs duty on completely built cars was raised from 20% to 25%, making imported luxury cars more pricey. The customs duty on completely knocked down vehicles that are assembled locally has also been increased from 10% to 15%.
Mercedes Benz is focusing on growth from smaller cities that currently make up 30-40% of its sales. It sells more SUVs than sedans in these cities, while its E Class sedan is the top sellerin big cities.