Kerala has turned out to be a leading destination for luxury cars with Mercedes-Benz registering a 36 per cent sales growth in the first half, outpacing the company’s national growth of 25 per cent.

Kerala is contributing 6 per cent to national sales of Mercedes-Benz and the State with its growing customer base is playing a major role in boosting sales, Eberhard Kern, Managing Director and CEO said.

However, he was quite apprehensive in sustaining this sales momentum in Kerala for the short term because of the recent increase in taxes for luxury vehicles by the State Government from 15 to 20 per cent purportedly to tide over the financial crisis.

Answering a question, he said “it may impact the demand for the short term as the 20 per cent rate is the highest in India”. He also reminded that the overall tax structure for luxury cars in India is very high compared to other countries.

Kern was speaking to reporters on Monday on the sidelines of the opening of the 22,000 sq ft dealership at nearby Aluva, set up by Rajasree Motors at an investment of ₹15 crore.

Referring to national sales, he said the German car maker has emerged as the fastest growing luxury brand by recording a 25 per cent growth in the first half selling 4,717 vehicles against 3,765 in the corresponding period last year. The company draws 55 per cent sales from smaller towns compared to a 45 per cent from metros.

Against a stagnant market last year, he said the there were several positive trends with changes in consumer sentiments since May especially with the new government coming up at the Centre. This coupled with the company’s product portfolio, good dealer network, and increase in touch points etc have all contributed for sales growth.

The company, he said, is in the final stages of doubling its production capacity at the manufacturing facility in Chakan near Pune from 10,000 to 20,000 units by making an additional investment of ₹200 crore. This would help Mercedes-Benz to become the largest luxury car maker in India, he added.

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