India’s Finance Minister P Chidambaram made two significant statements in his budget speech that are likely to put the brakes on some categories of vehicles and sway buying decisions considerably. The first was the increase in excise duty on SUVs from 27% to 30%, which will see all SUV makers raising the prices of their vehicles in the next few days. Also read: Budget impact: SUVs to become more expensive

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But the second statement would affect you, if you were considering buying a Mercedes Benz, Audi, BMW, Range Rover, Lamborghini, Bentley or any of the luxury brands that sell cars in India. Import duty on fully built luxury car imports (those that have a price tag of over $40,000 or INR Rs. 22 lakh before import) has been raised from 75% to 100%, which straightway pushes prices up 25%. Also read: Lamborghini launches Gallardo LP560-4 and LP570-4 supercars in India


This means if you were planning to buy a Lamborghini Gallardo, for instance, that costs Rs. 2.6 crores ex-showroom, the price will straight away shoot up to about Rs. 3.25 crores on the face of it! Lower down the price segment, if you were considering an Audi A8 base variant at Rs. 92 lakh, it would now cost about Rs. 1.15 crore out of the showroom!

However, a few cars have managed to duck under the radar here. This move in the budget is clearly directed at getting carmakers to invest in more localization of their cars and create jobs to kick start the economy. BMW, for instance, won’t feel the pinch for at least three of its models that it brings in as CKDs (completely knocked down kits) and assembles here (CKD duty is only 30% for such cars). These include the popular BMW X1, the BMW 3-Series and the BMW 7 Series. The same is the case with Audi’s A4, A6, Q5 and Q7 which are assembled in India. Also read: Audi begins local assembly of Q7 will slash prices

Carmakers like Jaguar-Landrover and Volvo will be significantly hit as they import most of their vehicles as completely built units. The duty on second-hand used imported vehicles too has been raised from 101% to 125%, further discouraging use of such cars. Also read: Should you buy an imported used car?

The budget has also increased excise duties on imported bikes with import duty on bikes of 800 cc and above to go for 60% to 75%, making superbikes more expensive, but still giving enough room for those with CKD operations such as Harley Davidson.