Mercedes Benz warn of prices going back to pre-GST level

Chennai: German luxury car maker Mercedes Benz on Tuesday said that levy of cess might see prices of its vehicles go back to what was prevalent before implementation of Goods and Services Tax.

Mercedes Benz India, Managing Director, Roland Folger, said that the situation may go back to "square one" due to levy of cess for large cars and Sports Utility vehicles if government does not intervene.

He was speaking to reporters after inaugurating the company's first AMG Performance Centre here, the seventh in the country.

To a query, he said that after GST was implemented,prices (of Mercedes Benz cars) went down. "Then we had cess.It is still an ordinance. It may be back to square one (if cess is levied). The price may go what was (prevailing) before GST", he said.

Under the GST regime, large cars with engine capacity of greater than 1,500 cc and SUVs with length of more than four metres and engine greater than 1,500 cc attracts cess of 15 per cent in addition to the top tax rate of 28 per cent.

The overall tax incidence on locally-assembled luxury cars had come down from around 55 percent earlier to 43 percent in the GST regime.

Last month, Folger had sought lower taxes on luxury cars in India, saying the move would help in job creation as well as increase tax collection from the segment.

"We have seen in India that if on the one hand something is given, then on the other hand something is taken back", Folger had said.

Referring to the company's AMG Performance Centre, he said "We are proud to inaugurate our first AMG Performance in your city today. 2017 is a year of celebration for us. Mercedes Benz has completed 50 years.. We believe the AMG Performance cars will increase volumes".

In the January-June period, the company sold 7,171 units, a growth of 8.7 per cent over the 6,597 units it sold during the same period last year.

Mercedes Benz had reported its best ever quarterly sales at 3,521 units in April-June 2017 period, up from 2,975 units during same period of last year.

The company had sold 13,231 units in 2016.