Mercedes-Benz Urges Uniform Road Tax in India After GST Relief

Mercedes-Benz India is gearing up for what could be its most successful festive season yet, driven by a recent GST rate cut that has reduced the tax burden on luxury vehicles, according to MD and CEO Santosh Iyer. In an interview with PTI in Munich on September 14, 2025, Iyer expressed optimism about surging demand, noting that the GST rationalization, effective September 22, lowers the overall tax on luxury cars (over 1500cc or 4m in length) by removing the compensation cess, despite a new flat 40% GST rate. This has led to a 6-8% price reduction, spurring positive market sentiment.

Iyer, however, called for uniform road taxes across states, which currently range from 15-22%, to ensure these cost benefits reach consumers. “Without capping state levies, the GST cut’s impact may be diluted,” he warned, highlighting the risk of rising taxes in India’s federal structure. He advocated for a policy to stabilize vehicle taxation to support the automotive industry’s long-term growth, which remains one of the highest-taxed sectors in the country.

The luxury car market, though small compared to India’s overall passenger vehicle segment, is poised for double-digit growth, correlating directly with rising per capita income, which jumped from USD 1,550 in 2014 to USD 2,500 in 2024. Iyer noted that Mercedes-Benz sold 1.5 lakh cars in India over the last decade, with one lakh in the past six years alone, reflecting economic growth. “As India’s economy develops, sustainable growth will drive us to higher numbers in the next 5-10 years,” he said.

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Globally, Mercedes-Benz is launching a major product offensive, with new models set to arrive in India, where over 90% of its cars are locally produced at its Pune facility. With over Rs 3,000 crore invested in India, the company has ample capacity to meet demand. Iyer also endorsed the India-EU Free Trade Agreement, noting that it could boost two-way trade, benefiting Indian manufacturers’ access to global markets while impacting only the 10% of Mercedes’ cars that are imported.

Mathias Geisen, a member of Mercedes-Benz Group AG’s Board of Management, reaffirmed India as a “priority market,” with plans to continue investments and bolster local production, regardless of the FTA’s outcome. With bilateral EU-India trade reaching USD 135 billion in 2023-24, the agreement could further enhance opportunities. As the festive season approaches, Mercedes-Benz is banking on the GST cut and new models to deliver record sales, while advocating for tax reforms to sustain India’s luxury car market growth.

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