At stake are British marques such as Rolls-Royce, Aston Martin, Bentley and McLaren besides some models from Jaguar Land Rover like the Range Rover SV or the BMW-made Mini. These brands could see a price reset once the FTA comes into effect, resulting from sharp import duty cuts. That could however take at least 12 to 14 months to happen, analysts and industry experts said, escalating worries at dealerships of such high-end cars already battling deferment of consumer purchases.
A total of 250 ultra-luxury imported cars were sold in calendar 2024, comprising just 0.49% of the total 51,000 luxury cars sold in the Indian market, as per industry estimates. Dealers and executives at super luxury carmakers said, requesting anonymity, that affluent buyers are holding off on purchases in anticipation of lower prices.
Dealers noted a sharp drop in bookings for more than 3000cc petrol-powered vehicles imported as completely built units (CBUs).
Consumers are keenly awaiting the FTA rollout.
No Drastic Drop
Currently, these ultra-luxury cars currently attract import duties exceeding 100%.Under the proposed FTA, duties could drop to about 30% under a limited quota system, translating to savings of 1-1.5 crore per vehicle.
However, according to an executive at a luxury carmaker, unlike the popular belief, eventually, there won’t be a drastic drop in prices.
“The drop in customs duty from 110% to around 30% won’t fully lower car prices. That’s because much of the cost-like currency rates, shipping, and transfer pricing rules-is fixed and won’t change,” the executive said. “Only about 30-40% of the price depends on customs duty. So, even after the duty cut, buyers will see a smaller price drop than expected.”
Tacking buyer hesitation
Ultra-luxury car brands are scrambling to manage the fallout. Rolls-Royce is offering limited price protection clauses or partial refunds if duties are reduced within six months after purchase – a rare, proactive move that underscores the current level of buyer hesitation. BMW has a similar offer for its Mini 3-Door Cooper S model produced at its Oxford plant in the UK. The company also sells a second Mini model, which is however not covered under the price protection offer as it is imported as a CBU from BMW’s plant in Germany.
Jaguar Land Rover (JLR), on the other hand, is staying on the sidelines.
Imported CBUs account for around 7% of JLR’s yearly volume of 6,000-6,500 cars in India, making the Tata Motors unit cautious in the absence of clarity on the effective date of the new duty regime, said a person aware of the company’s plans.
“The uncertainty is paralysing both buyers and dealers,” said a dealer of imported brands. “We are stuck with duty-paid inventory that may become unsellable overnight, while customers are simply waiting for the price correction. Without clarity, the financial risk…
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