Luxury car manufacturers BMW and Mercedes-Benz have joined the bandwagon of GST rate reductions, as their customers can now enjoy benefits of up to ₹10 lakh due to the reduction in levies. According to the previous rates, luxury cars attracted a total of 50% taxes, which included a GST rate of 28% and a 22% compensation cess. Now, after the GST Council’s announcement on September 3, all luxury vehicles will see a flat 40% rate, without any cess.

In the Mercedes-Benz portfolio, their flagship model, the S-Class 4MATIC, offers the maximum reduction of ₹11 lakh, dropping the price from ₹1.99 crore to ₹1.88 crore. The GLS 450d AMG Line trims its price tag by ₹10 lakh, to ₹1.34 crore, whereas the GLE 450 4MATIC sees a price cut of ₹8 lakh.

Amongst the mid-range models, the E-Class series is offering cost reductions in the range of ₹5.5 lakh to ₹6.2 lakh. Meanwhile, the A-class has become cheaper by ₹2.6 lakh, with its new price tag at ₹45.95 lakh. 

The GLA 220d 4MATIC AMG Line’s price has reduced by ₹3.8 lakh, which would retail at ₹52.70 lakh. The GLC 300 4MATIC, a popular seller in the three-pointed star’s portfolio, is now priced at ₹73.95 lakh, trimming ₹5.3 lakh from its pre-GST price. 

On the other hand, BMW is offering up to ₹9 lakh in savings on its X7 model, bringing it down from ₹1.34 crore to ₹1.25 crore. The X5 comes below the ₹1 crore threshold, and will now be priced at ₹93.7 lakh. The smallest SUV in the portfolio, the X1, sees a ₹1.80 lakh reduction, dropping the price to ₹50.6 lakh. Amongst the sedans, the BMW 5 LWB sees a ₹4.10 lakh drop, the BMW 2 Series Gran Coupé drops by ₹1.60 lakh and the BMW 3 LWB by ₹3.40 lakh, with their new prices at ₹72.4 lakh, ₹45.3 lakh and ₹60.5 lakh respectively.

The electric variants will not see any price change as they do not come under the 40% taxation, and will continue with the 5% GST rates. 

Mercedes-Benz, in its annual financial report, stated that EVs contributed to 7% of its total sales, with the EQS model being the bestseller. BMW recently announced that it has sold 5,000 EVs in the country in the first half of the current calendar year across all segments (BMW, BMW Motorrad and MINI), with BMW and MINI selling 1,322 EVs. The iX1 LWB, a specially made-for-India model, has been the bestseller.

The GST reductions in the ICE variants make it more affordable and accessible for the customers, thereby putting pressure on their own EV portfolio.