In India, the on-road prices of super luxury cars are 150-200 per cent higher than the ex-factory prices after including the customs duty, taxes and registration costs. The luxury carmakers have long been demanding to reduce tax rates, as they believe it will not only grow the market but also increase tax revenues for the government.
Matteo Ortenzi, Asia Pacific CEO of Italian super luxury sports carmaker Lamborghini believes India is in a high taxation range for luxury cars. Despite high taxes, he sees growth potential in the Indian market, but is apprehensive about frequent changes in the tax structure. "If the tax structure changes continuously, the business strategy goes for a toss," he says. "We have a wait-and-watch approach to taxation changes in various countries. If tax rules don't change every year, the Indian market has huge potential," Ortenzi adds.
"The luxury car makers are used to high taxation regimes. But what is more important is the consistency and long-term approach," he says, adding that reducing tax rates will enhance the market and increase tax revenues of the government in absolute numbers. Ortenzi is in India for the launch of Lamborghini's new model, Huracan Evo Spyder. The price of Spyder starts from Rs 4.1 crore in the country. It costs just Rs 2 crore in the US market because of lesser taxes.
In 2018, the US President Donald Trump had slammed India for charging high duty on Harley Davidson superbikes against zero per cent duty that America charges on Indian motorcycles. The US president had threatened India with a "reciprocal" tax. But, the issue died down quiet fast.
At a time when the Indian luxury car market is witnessing a sharp decline, the Italian super luxury carmaker is projected to grow 30 per cent in sales to 60 units in 2019, thanks to its super sports utility vehicle Urus. Lamborghini will become the first super luxury carmaker in India to sell more than 50 vehicles in a year because of Urus. It has a 40 per cent market share in super luxury space in India. However, the sales volume is less than one per cent of the global sales of Lamborghini.
Ortenzi targets to make India as one of the top 10 markets for Lambhorgini in the world. "India has a population of 1.3 billion. It is the fifth largest economy in the world and the wealth of the people is growing consistently. India is fast upgrading the infrastructure. These factors will facilitate the luxury market to grow," he said.
Sharad Agarwal, Head of Lamborghini India said that the carmaker is evaluating the markets such as Hyderabad, Chennai, Kolkata and Ahmadabad for opening new showrooms. "Once we reach a volume threshold, we will look at one of these cities for opening new showrooms. But, we want to make sure that it would be economical for our partner if we open showroom in that city. We have a long-term approach for the Indian market," said Ortenzi.
Lamborghini has three franchise showrooms at present - in Mumbai, Delhi and Bengaluru - where it has added people, expanded after sales capabilities and capacities. "We have upgraded all three showrooms with experience zones. The customers in the super luxury segment want to customise their cars. So, Lambhorgini has started Ad Personam launch in showrooms and it will help customers in personalisation of their cars, selecting colours and materials which go inside. The customers can also do 3D configuration of the car on the screen," said Sharad Agarwal.
Lamborghini has also launched a customer application 'Unica' through which the customer can customise their car sitting at home. When they handover the Unica code to the showroom, they will get the chance to touch and feel the materials that go inside the car.
"Right now, our focus is to sustain the growth that we have achieved in the Indian market and keep increasing the excitement level among customers. We always want to be a brand that supplies one car less than the demand. If there is a favourable economy and market and consistency in taxation, we will achieve tremendous volume growth in next three-five years," said Agarwal.