Sales can double if taxation is right, says Mercedes-Benz India CEO
NEW DELHI, MAY 9
Mercedes-Benz India has said it can double its sales if the government gives rebates on tax on each car.
“If you take out the cess — 22 per cent — my personal guess would be we can double our volume. This would mean we create many more jobs because doubling our volume (more than 30,000) for us would mean double our workforce,” Roland Folger, Managing Director and Chief Executive Officer, Mercedes-Benz India, told Business Line recently.
He said the company can ramp up its capacity to more than 30,000 vehicles right now if the government reduces the tax revenue per vehicle by 20 per cent.
“By doubling the volume, you massively compensate and you save more taxes,” Folger said on the sidelines of the launch of the AMG E63 S here.
The company sold 16,236 units in 2017, up by 22 per cent, from 13,259 units in 2016, and has 50 per cent market share in the domestic luxury car segment. In the first quarter this year, the company has already sold 4,556 units, a growth of 25 per cent year-on-year.
Job creation
Folger said the luxury car market is expected to grow only if taxation issues are resolved because only that would lead to increase in the average income.
“People are moving up with higher income and it’s a ripple effect — the more people in the middle-income segment make money, the more you can spend — so it’s a continuous movement.
“In India, we have very low age population and that especially is important. In our case, we are still significantly away from the medium income family and that is largely because of the taxation, the duty models that are there in the country,” he explained.
He said the industry is trying to convince the government to put more emphasis on creating additional jobs.
For instance, the company doubling capacity will mean more job creation and more income generation.
Having said that, he added that issues like cess will need a lot of internal discussions (in the government) too.
“So we are not expecting that to happen any time soon, But, let’s see … we have good arguments and we are hopeful.”
e-vehicles
When asked about the electric vehicles’ launch in India, Folger said the company can bring in EVs as early as 2019, but it has to look at favourable taxation as completely-built units attract a lot of taxes in India.
Folger added that the company has EVs which can give a range of up to 500 km, but prices will be high as taxon imports is too high.
In the Budget for 2018-19, Finance Minister Arun Jaitley had increased customs duty on completely knocked down imports of motor vehicles, motor cars and motorcycles from 10 per cent to 15 per cent.
The government had also raised custom duty on specified parts/ accessories of motor vehicles, motor cars and motorcycles from 7.5 per cent to 15 per cent, which led to higher prices of these products.
The luxury car makers had to pass on the burden to customers by increasing the prices of their vehicles, by ₹1 lakh to ₹10 lakh.
In September, cess on large cars was increased to 20 per cent from 15 per cent, over and above the Goods and Services Tax rate of 28 per cent. For SUVs, it was hiked to 22 per cent from 15 per cent.
