The downturn in the auto sector looks pretty domestic in nature. Car sales in India declined by 8.15 per cent in November, as per SIAM statistics. Domestic passenger car sales during November 2013 stood at 1,42,849 units compared to 1,55,535 units sold in November 2012. High rates of interest and escalating fuel prices also played a major role in depressed sales.
The story however takes a different route when it comes to luxury cars. Car makers especially the Big Four from Germany–BMW, Mercedes, Audi and Porsche–see the Brics (Brazil, Russia, India, China and South Africa) as their new showroom. It’s not without reason.
The January-October 2013 period saw Audi sell 8,393 units in India, followed by Mercedes with 6416 units. (BMW says it will disclose its sales numbers only in 2014.)
Despite the downturn, the Indian market saw as many as 13 car launches in the luxury space 2013, with the cheapest launch being that of the Toyota Land Cruiser Prado, which is priced at `85 lakh.
A recent report by research firm IMRB and industry body Confederation of Indian Industries (CII) claimed that the size of the luxury car market in India at $1.46 billion (2012). This niche segment is said to have grown nearly 20 per cent over the last three years and is expected to grow by at least another 15 per cent in 2013.
For Eberhard Kern, managing director and chief executive of Mercedes India, “It (2013)will clearly end up as the best year that Mercedes has ever achieved in India.” Audi India head Joe King says: “We have moved within striking distance of our goal, of becoming the first luxury car manufacturer in India to cross sales of 10,000 units in a calendar year.” For the January–October 2013 period, Audi’s sales stood at 8,393 units, up 15.4 per cent from 7,267 units in the same period last year.
Despite the dip in sales, from 35 per cent in 2010 to 16 per cent in 2012, players in the luxury segment fancy their chances to optimally use the potential found here. “The high net worth individuals, who are our target customers, are fast growing in India. In the coming years, we expect our sales here to be in the region of 30-40 units a year,” said Stephan Winkelmann, president and CEO of Automobili Lamborghini said after the rollout of the limited edition Gallardo. The car, with a price tag of `3.06 crore, sold out in no time.
As India emerges as a nation with the highest growth rate of Ultra-High Networth Individual (UHNIW) among the Brics nations, it is increasingly becoming ‘the destination’ for luxe car marketers.
Interestingly, luxury is typically considered an ‘urban phenomenon’ but it is definitely not the case when it comes to luxury cars. Tier II and Tier III cities across India are increasingly gaining prominence for luxury car companies.
Automobile makers are pushing for both cars as well as SUVs to increase their presence here. Super luxury car maker Bentley has termed India the ‘hub of luxury’. “India is a very important market for Bentley it is the hub of luxury,” said Chris Buxton, regional manager (India, South Africa and Middle East) after launching the Flying Spur with an asking price of `3.1 crore in October.
Considering the new strategies being deployed by luxury car makers, high sales of such cars may not be such a farfetched idea. “Luxury car makers are offering schemes like five-month EMI waivers, one year’s worth of free insurance and three years of free maintenance. Moreover, the loan repayment time period for this segment is seven years along with options of flexible EMIs and attractive buyback offers,” the IMRB report points out.