The next turn

Shine Jacob and Sohini Das on taxation, trade deals and the price of luxury

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After a subdued start to 2025, India’s luxury automobile market is finding its rhythm again.

The year began under the shadow of a weakening rupee, stock market volatility, and geopolitical unease — factors that dampened sentiment after a record-breaking 2024 when more than 51,500 luxury cars were sold. The first half of 2025 saw only a modest 1.8 per cent growth, with 22,900 units sold. But a midyear policy shift has recharged the market.

The introduction of GST 2.0, which levies a flat 40 per cent tax on luxury vehicles, has spurred renewed enthusiasm. Prices have fallen by 6-8 per cent, with models such as the Range Rover cheaper by up to ₹30 lakh, the Mercedes-Benz S-Class by ₹11 lakh, and the BMW X7 and Audi Q8 by around ₹9 lakh and ₹8 lakh, respectively. The effect has been immediate: Mercedes-Benz India logged its best-ever Navratri sales, retailing over 2,500 cars in nine days, and its best-ever second quarter with 5,119 units.