Mercedes Benz India is set to raise the price of its vehicles owing to a decline in the value of the Indian rupee. The management has narrowed down to increasing the price of its luxury and sport vehicles majorly based on the depreciation of the local currency. Before this decline in the value of the currency, costs have been increasing driven by high input costs and tax increases. Taxes have increased from 60% to 75%, and currently they are standing at 100% on imports of luxury cars into the country. The rupee has declined to an all time low of 68.80 against the dollar, and the tax increase has been set on vehicles costing more than $ 40,000.
These factors have made Mercedes Benz India conclude on increasing the price by 2.5% to 4.5%. However, no increase will be witnessed to its locally assembled SUV which was introduced by an actor known as Abhay Deol. This increase is set to take effect on Sunday. The company has been absorbing the costs internally, but this strategy will be negative as far as long run performance is concerned. The Indian government has also classified the vehicles on the basis of gasoline engines – 2.5 liters for diesel engines and 3 liters for gasoline engines. These factors combined will lead to an increase of above 4% of the current prices of A class and B class hatchbacks. Mercedes Benz India will increase the price of A class hatchback to 2.2 million rupees and that of the B class to 2.35 million rupees. The sharpest increase is expected to fall to the C class sedan. The vehicle is, in fact, expected to cost 3.22 million rupees.