European cars still to expensive for India?

 

European cars still to expensive for India?

Yes, European cars have historically been very expensive in India due to high import tariffs, but a new trade deal is set to change this, making them more affordable for the premium market segment. The recent India-EU Free Trade Agreement (FTA) will significantly reduce import duties, though prices for most popular models assembled locally are not expected to change immediately.

 

Current Situation

European cars in India are considered expensive primarily due to substantial import duties, which for fully imported cars (CBUs) previously ranged from 70% to 110%. This has meant that a car costing a certain amount in Europe could more than double in price by the time it reaches an Indian showroom. The average Indian car buyer typically purchases vehicles priced below 2.0 million rupees (approx. €21,756), a segment dominated by domestic brands and largely untouched by the high-end European market.

Impact of the India-EU FTA

Under the new trade deal, import duties on select European cars will be reduced in a phased, quota-based manner, which is expected to benefit the luxury and high-performance segments the most.

Tariff Reductions: Duties on eligible high-end fully imported cars will initially be slashed to 30-35% and phased down to just 10% over several years.

Target Segment: The reductions apply to cars with an import price (CIF value) of over €15,000, so everyday mass-market European cars are not the primary beneficiaries.

Limited Immediate Impact: Industry experts caution that immediate price reductions on locally assembled models (which make up over 90% of luxury car sales) are unlikely, as these already attract a much lower duty of around 16.5%. The price cuts will mostly affect niche, ultra-luxury, or performance models that are fully imported.

Market Share: European car manufacturers currently hold less than a 4% share of the Indian car market, so even with the price adjustments, their target audience remains the premium buyer.

In summary, while European cars will remain a premium purchase compared to domestic options, the trade deal is set to make high-end and luxury models significantly more affordable for wealthy Indian consumers, potentially transforming the top end of the market.