With the increase in cess now becoming inevitable, luxury car buyers are flocking to showrooms to make the best of current prices at juicy deals.

Audi, which launched the petrol version of its flagship sports utility vehicle Q7 today, said that the model is nearly sold out for the Indian market.

There will be a Rs 7 lakh increase on the same Q7 when bought after the government implements the cess which is expected to be a maximum of 10 percent.

“Yes there has been a sharp increase in enquiries and bookings over the last few weeks. People are keen to beat the cess hike and avoid paying that much more,” said Rahil Ansari, head, Audi India, speaking to Moneycontrol.

Audi, which is India’s third largest luxury car maker, fears a double-digit fall in sales if prices are to go up by 10 percent. The company, which is owned by Volkswagen, said its retail sales this year will be on par with 2016. The company, however, refused to share sales numbers.

“Prices after the cess hike will be more than before GST implementation. It is wrong to assume that the rich don’t mind paying more. Even a rise of Rs 1 lakh can alter demand decision,” added Ansari.

The government, under GST, charges 28 percent on small cars. Another 15 percent is charged as cess on large cars. With the Cabinet giving its nod last week the Finance Ministry now has the power to raise this cess to 25 percent taking the total tax to 53 percent.

Mercedes-Benz, the current market leader in the luxury car category, launched a slew of models, some of which are in the Rs 1-crore plus price bracket. Sources say Mercedes, too, has seen a sharp spurt in demand over the last 3-4 weeks.

While the cess hike will not have any perceived impact on the product launch pipeline for India it will hurt the Make-in-India initiative adopted by these companies. At least 25 luxury cars (with multiple variants between them) are made in India by Mercedes, BMW, Audi and Jaguar Land Rover.

“We will review our position once the cess hike is done. It won't change out product pipeline but it will force us to review production plans,” added Ansari.

The Q7 launched today will be locally assembled by Audi at the Aurangabad facility along with half a dozen other models. The cess hike also threatens to restrict expansion of retail presence of luxury car makers.

For instance, Audi had initially planned to have 100 touch points by end of this year, up from 90 touch points closing last year. The company now has decided to not to add anymore showrooms till the time the market absorbs the cess hike impact.