GST may cause temporary disruption but will benefit in long run: JLR India chief
Luxury cars are expected to attract 28% GST, besides a cess capped at 13%. The net taxes on luxury cars are thus slated to reduce by 4-8%, which would boost sales July onwards. So JLR, besides BMW, Mercedes-Benz and Ford, have passed on the benefit of GST to the customer right away till June 30.autos Updated: Jun 03, 2017 17:23 IST
The upcoming goods and service tax (GST) may cause a temporary disruption in the market, but will be beneficial in the long run, luxury carmaker Jaguar Land Rover said on Saturday, echoing the narrative much sold during the Narendra Modi government’s demonetisation drive of November-December 2016.
“Any change will cause a certain amount of pain during the transition. But ultimately, if you are convinced that the change is for the good, then you ride through that change with conviction,” Rohit Suri, president of Jaguar Land Rover India (JLR India), told HT in New Delhi on Saturday.
When asked if there are any doubts over benefits of the new tax regime set to kick off on July 1, Suri said, “There may be some amount of disruption. Of course, one will have to be prepared with a plan to deal with it. And if someone doesn’t stick to the rules specified, or is not ready for the new taxes, there will be disruptions.”
But once the dust settles down, it will benefit in the longer run,” Suri said.
Luxury cars are expected to attract 28% GST, besides a cess capped at 13%. The net taxes on luxury cars are thus slated to reduce by 4-8%, which would boost sales July onwards. This may cause a drop in the sales due to anxious buyers delaying their purchase.
So JLR, besides BMW, Mercedes-Benz and Ford, have passed on the benefit of GST to the customer right away till June 30.
After Tata Motors bought it from the Ford Motor Company in 2008, the British carmaker entered India in 2010 and sold around 200 odd cars in the very first year. Since then, the automaker has “grown exponentially” in its segment. On Saturday, JLR India opened its 25th showroom at Moti Nagar in New Delhi.
Tata Motors-owned JLR holds up to 8-9% share in the luxury car segment together. While Jaguar sells luxury sedans XE, XF, XJ and XJL; a sports coupe F-Type and an SUV F-Pace, the Land Rover brand clocks robust sales of its luxury SUV range -- from Discovery Sport and Range Rover Evoque -- in both diesel and petrol engines.
The British carmaker is also “very keen” on bringing to India its first electric car, the Jaguar I-Pace, which is launching next year in global markets. “But for that, we need a firm policy on electric cars and the right ecosystem in India, such as infrastructure, incentives for the product and so on. A lot depends on that,” Suri said.
On the entry of the American luxury brand Jeep in india, Suri said, “We welcome the competition; you become stronger when there’s a competition. So far we haven’t seen any impact on our Land Rover sales.
“May be they have some good plans to compete, but we are also very strongly placed, with our portfolio of the Discovery Sport to the Evoque and the Jaguar F-Pace. Also we are coming with the new Discovery and the Velar this year,” he added.
Out of the entire range, the Jaguar XE, XF, XJ, Range Rover Evoque and Discovery Sport are already localised, Suri said.
The percentage of localisation varies model to model, he told HT. “JLR is a global brand which sources parts from different parts of the world. The global supply base is now even sourcing some parts from India, and then they are used in the making of the car. So there can never be a definite percentage of localisation.”
When asked about the relationship with the Tata Motors, Suri said, “Tata is the parent company and they have been very happy and cooperative.”
The sales of JLR have long been key for the parent Tata Motors whose passenger vehicle sales have picked up only recently, thanks to new models like Tiago, Tigor and the Hexa. However, it is JLR that’s keeping the company afloat, according to several sales data and reports.