Why is Lexus costly in India?
At a glance, Lexus commands higher prices in India primarily because imported luxury cars face a multi-layer tax and duty regime, plus the economics of selling a niche brand in a relatively small market. In short, the sticker price in other markets does not translate directly to India once duties, taxes, and logistics are added.
Below is a closer look at why a brand that is widely available elsewhere ends up with a higher on‑road price here. India’s taxation framework on imports, the scarcity of locally produced Lexus models, and the costs of building a premium service network all combine to push up the landed cost for Indian buyers. These factors affect not just the sticker price but the total cost of ownership as well, shaping how customers perceive value against rivals with different sourcing strategies.
Taxation and import duties that lift the price
Several government-imposed charges determine the landed price of an imported luxury car like Lexus. The main components are outlined below.
- Basic Customs Duty (BCD) on passenger cars imported as Completely Built Units (CBUs) — historically around 60% for cars. This is a foundational layer that inflates the base price before other taxes are added.
- Social Welfare Surcharge (SWS) — typically 10% of the BCD. This tops up the duty amount applied to the product before further levies.
- Integrated Goods and Services Tax (IGST) — generally applied at a high rate (around 28% for passenger cars) on the value plus duties and surcharges. This effectively compounds the tax burden at the point of import.
- State-level charges and road taxes — these vary by state and can add a significant, sometimes volatile, component to the on-road price. They include registration fees, road tax, and other local levies.
- Currency fluctuations and logistics costs — exchange-rate movements and the price of transporting vehicles can further sway the final consumer price.
In practice, these components can push the on-road price of a Lexus well above its international sticker price, making the vehicle less price-competitive with locally assembled rivals or brands that have a stronger local manufacturing footprint.
Local manufacturing, market strategy, and their effect on price
Beyond import duties, how Lexus (and its parent network) approaches India’s market shapes pricing. The balance between sourcing, assembly, and servicing creates a second layer of cost considerations.
- Local assembly versus import — when models are CKD (Completely Knocked Down) or assembled locally, duties can be lower than CBUs. However, CKD assembly is not universally applied across all models and markets, so many Lexus vehicles entering India still bear higher import costs.
- Limited volume and dealer network — Lexus operates in India as a niche luxury brand with relatively small sales volumes. The costs of establishing and maintaining exclusive showrooms, certified service centers, and trained technicians are spread over a smaller base, raising per-vehicle costs.
- Premium service and parts — sustaining a luxury-brand experience requires genuine parts, specialized technicians, and long-term warranty commitments. These capabilities come at a premium and are reflected in pricing and service packages.
- Supply chain and logistics — importing premium components and maintaining a consistent supply chain for high-end models adds logistical overhead, further contributing to price.
- Exchange-rate risk — for a brand that relies on imported components and finished units, currency volatility can influence pricing strategy and margins.
Taken together, the combination of high import duties, occasional local assembly decisions, and the costs of building an exclusive dealer and service network helps explain why Lexus models carry a higher price tag in India than in many other markets.
Brand positioning, ownership experience, and consumer impact
Premium branding and ownership experience are central to Lexus’s market proposition in India. The way the brand positions itself—and the expectations buyers bring—also shape price and perceived value.
- Exclusivity and brand premium — Lexus emphasizes a refined, service-centric luxury experience. This exclusivity supports higher pricing as part of value perception among target buyers.
- Warranty and after-sales assurance — comprehensive warranty terms, dedicated service bays, and factory-backed maintenance plans add value but also cost, influencing overall ownership economics.
- Model availability and lifecycle — with fewer models in the lineup and a longer refresh cycle, buyers may pay a premium for the latest generation and for assurance of long-term parts availability.
For prospective buyers, these factors translate into higher on-road prices and a distinctive ownership proposition that trades price sensitivity for a premium experience and brand trust.
What this means for consumers and the market
Indian buyers weighing Lexus against rivals from tier-1 luxury brands should consider total ownership costs, not just the sticker price. The price gap versus competitors can reflect the combination of import duties, the degree of local assembly, service costs, and the exclusivity of the brand in the Indian market.
As the market evolves, policy changes, localization efforts, and the expansion of the dealership network could alter pricing dynamics. Consumers are advised to compare the on-road price, warranty terms, maintenance plans, and potential resale value across brands to determine the true cost of ownership.
Model availability and price range (context)
Model lineups, introductory pricing, and on-road totals vary by year and by state. While some Lexus models may be offered in India through import channels, others could be localized to varying degrees. Prospective buyers should check current showroom pricing, including all taxes and charges, and verify whether a model is imported as a CBU or assembled locally in India at the time of purchase.
Summary
Lexus vehicles are comparatively costly in India because the country’s import regime imposes substantial duties and taxes on CBUs, compounded by state charges and currency effects. The brand’s niche positioning, limited local production or assembly, and the need to sustain a premium service network also raise ownership costs. Buyers should weigh total cost of ownership—price after duties, service commitments, and potential local assembly options—against competing luxury brands as part of a comprehensive affordability assessment.
