Big news for luxury car prices in India: Volkswagen, BMW, and Mercedes cars could get cheaper soon. The government is planning to lower import taxes on European cars under a new trade deal with the EU, which could be officially announced on Tuesday, January 27, 2026.
For years, high import taxes made European cars extremely expensive in India. But with India planning to cut EU car import duties to 40%, and later 10%, under a trade pact, buying a luxury or premium car from Europe may no longer feel out of reach.
Why This Matters
India is the third-largest car market in the world, but European brands have been a small part of it, making up less than 4% of car sales. High import taxes, sometimes more than 100%, made even popular models like the Volkswagen Golf, BMW X4, or Mercedes S-Class very expensive.
Lowering these taxes could give buyers more choices and make luxury cars more affordable. It will also allow European brands to try new models in India before investing in local factories.
How the Tariff Cuts Will Work
Cars priced above 15,000 euros (around ₹13.5 lakh) will see import taxes drop to 40% immediately.
Over time, this could fall further to 10%, making European cars much cheaper.
Initially, the lower taxes will apply to 200,000 cars per year, so buyers may see Limited Time Deals on Popular Cars as brands try to sell within the quota.
This step is a balance between protecting local car makers and giving buyers access to more international cars.
How Buyers Will Benefit
Volkswagen: More Affordable Performance Cars
Volkswagen’s performance models, like the Golf GTI or Skoda Octavia RS, have been too expensive for many enthusiasts. With lower taxes, these cars could become more realistic to buy, bringing more excitement to Indian roads.
BMW: Sporty Luxury Made Easier
BMW SUVs and sedans, like the X4, could see price drops of several lakhs. This could allow BMW to offer more versions and special editions in India, giving buyers better options.
Mercedes-Benz: Luxury Becomes More Accessible
Mercedes models like the C-Class, GLE, and S-Class could also become more affordable. Lower import taxes will let Mercedes offer personalized deals and make luxury car ownership in India less intimidating.
Lowering prices of Volkswagen, BMW and Mercedes models will increase competition and give buyers more choice in the luxury car segment.
Electric Cars Are Not Included (Yet)
The current deal focuses only on petrol and diesel cars. Electric vehicles (EVs) from Europe won’t get lower taxes for the first five years. This protects Indian EV makers like Tata Motors and Mahindra, who have invested heavily in batteries and charging networks.
After five years, European EVs could also get taxes cut to 10%, giving buyers more options in the EV segment too.
What This Means for Indian Buyers
More options in the luxury car segment
Lower luxury car prices in India
Chances of Limited Time Deals on Popular Cars
European brands testing new models before setting up local factories
This move could make premium European cars more common on Indian roads and help buyers finally own cars that once felt out of reach.
Bigger Picture: India-EU Trade Deal
The car tariff cuts are part of a bigger India-EU trade deal. India will also benefit by exporting products like textiles and jewellery to Europe, while European companies will get better access to India’s fast-growing car market. It’s a win-win deal for both sides.
Conclusion about luxury car prices in India
The news that Volkswagen, BMW and Mercedes cars could get cheaper as India plans EU tariff cuts is exciting for car buyers. As India plans to cut EU car import duties to 40%, later 10%, luxury car ownership is becoming more achievable.
With the potential of lowering prices of Volkswagen, BMW and Mercedes models and Limited Time Deals on Popular Cars, Indian buyers could enjoy a new era of luxury car prices in India. Roads across India may soon see more European cars, making premium car ownership a reality rather than just a dream.