TL;DR
India's luxury car market is challenged by currency volatility and high import duties, with industry players seeking reforms in the upcoming Budget 2026 to stabilize prices and encourage growth.
India's luxury automobile market is entering 2026 with cautious optimism, facing challenges primarily from currency volatility. While the market saw minimal growth in 2025 after crossing the 50,000-unit mark in 2024, demand for top-end vehicles (above ₹1.5 crore) remains strong. Mercedes-Benz India, for instance, reported an 11% growth in its S-Class and Maybach portfolio, and BMW's EV portfolio saw a substantial 200% increase.
A key concern for luxury car manufacturers is the high import and customs duties on fully imported vehicles, which can be as much as 110% for cars over $40,000. Industry leaders are advocating for a rationalization of these duties to a uniform 60% or 70% in the upcoming Union Budget 2026, which could lead to significant price corrections. Additionally, the automotive sector hopes for better fiscal management to stabilize forex movements, as currency depreciation has already led to quarterly price increases across luxury lineups.
