KOCHI: Though down by the sudden demonetisation announcement, the luxury car segment is not affected by this ‘surgical strike’. The initial estimates suggest that the segment has grown by 19 per cent in 2016 compared to last year. Actually, it is the one segments which drives the automobile segment during the crisis.
Kerala is a strong market for luxury vehicles in the country. The boom in luxury car sales in Kerala started in 2011-12. The luxury car market in Kerala has grown by 5 per cent over 2013. The state is estimated to account for over 10 per cent of the national sales of premium cars. Around 20 to 25 per cent of the total sales happen in Kochi city.
“The demonetisation drive has impacted customer behaviour in automobile sector. But barring November, the impact was minimal especially in the high-end car segment. After a month the crisis due to the unavailability of currency notes gave way to 100 per cent on-road finance by many banks and financial institutions. Now not only big businessmen but young professionals are also going for luxury cars. The market for the segment is strong and growing in the state and in Kochi,” said Eldo Benjamin, vice-president of Nippon Toyota.
He pointed out that owing to the on-road finance option, only 13 per cent of the sales happen through cash payment. He added that cars above Rs 25 lakh have registered 10 per cent growth in 2016 compared to 2015.
In 2008, the total demand in the luxury segment was just about 120 cars a year. But in that year BMW alone sold 148 cars. The total market for the segment is around 1,200 to 1,300 cars per year. Out of which around 400 cars are sold in Kochi alone. The other major markets in the state are Thiruvananthapuram, Kozhikode and Thrissur. The total market size is worth over Rs 1,000 crore.
“It is a fact that the sales were down in November due to demonetisation. But the sales picked up in December. The luxury segment is growing like anything and it is the major growth driver in the overall industry. In Kerala, the segment has already registered a growth of 19 per cent. Customers, who own premium sedans now upgrade into luxury segments. It is the major reason behind the spurt in sales. The trend will continue in the future as well,” said Sam K S - founder and CEO, ACT Solutions, a management consultancy firm and an automobile expert.
He pointed out that Mercedes Benz, with the opening of a new dealership at Kozhikode, continues to grow in the Kerala market and BMW, Audi, Volvo, Porsche, Jaguar Land Rover, etc are also making their mark in the segment.
Around 100 to 150 luxury or premium category cars are being sold in Kerala every month.
“Majority of the luxury cars have launched new models in 2016. This has driven sales in this vehicle category in the state. Normally the highest sales is registered in November and December. But this year November was not so good due to demonetisation. In December, the sales picked up.
Demonetisation has affected the salaried class very much. They try to own the mid-segment cars not the luxury ones. Hence, the premium segment was unmoved and posted growth,” said John Pail, managing director, Popular Automobiles.
Premium cars within the price range Rs 25 lakh to Rs 3 crore are categorised as luxury. The industry registers sales of around Rs 80 to 100 crore per month.