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India鈥檚 luxury car segment continues to speed ahead
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Mercedes-Benz admits it was “a little surprised” when Indian customers snapped up 125 of its new top-of-the-line S-Class luxury cars costing US$250,000 apiece in just 16 days.
India’s auto industry has skidded onto an icy patch and is set for a second straight year of decline, but one segment still speeding is luxury cars.
Analysts at India’s premier auto fair in the New Delhi’s suburb of Greater Noida last week said for the “really rich,” economic downturns have a “negligible impact” on their luxury spending.
The wealthy are less sensitive to high interest rates and are more resilient to downturns, say analysts.
“Luxury cars sales are still growing at 15 percent-plus year on year. For the next three years, segment growth is expected to continue at 15 percent upwards,” noted a report by the Confederation of Indian Industry and market research firm IMRB International.
Sales have gone into overdrive for parts of the luxury auto segment. Germany’s Daimler AG’s Mercedes- Benz, for instance, saw sales rocket 32 percent annually in India, despite punitive import tariffs.
Still, “while we believe strongly in our product, we were a little surprised when we sold 125 S-Class cars in 16 days — and this was to customers who bought them sight unseen,” Mercedes-Benz India Chief Executive Eberhard Kern said.
The cars purchased were the Indian launch edition of Mercedes’ latest luxury S-Class sedan, priced at 15.7 million rupees (US$250,000).
Passenger cars slump
In sharp contrast, passenger car sales are set to slump close to 10 percent in this financial year to March, forecasts the Society of Indian Automobile Manufacturers (SIAM), after years of growing around 30 percent.
The market has been hit by high borrowing costs and receding consumer confidence amid economic growth of just 4.5 percent — half the rate seen during India’s boom times.
But while India staggers from its worst downturn in a decade, previous years of rapid growth have created a new moneyed class who are buying prestige marques and keeping the segment above water.
“Economic downturns have a negligible impact on luxury consumers... and income levels overall have been rising,” Shrawan Raja of Indian Autos Blog, an Indian motoring portal, said.
Although World Bank figures show 33 percent of the planet’s poorest call India home, the country also has minted 65 dollar billionaires, according to Forbes, and hundreds of thousands of dollar millionaires.
A decade ago, the lone luxury car commonly seen on India’s famously congested, potholed roads was Mercedes, the first premium carmaker to open shop in 1995. But now Audis, Jaguars, Bentleys, Aston Martins, Porches and other top badges regularly weave through traffic.
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