DDepending on the source of your data, the luxury car market in India was between 30,000-35,000 units last year. In India, this segment is generally considered to be vehicles whose ex-showroom price is more than Rs 40 lakh. But the definition is not cast in stone. Different car makers slice the market in different ways. So cost cannot be the only deciding factor. This is also a make. Will the Kia EV6 priced at Rs 70 lakh be considered a ‘luxury vehicle’?
Badges matter: Rocking up to a function in a Mercedes-Benz counts, even if it’s a small Mercedes-Benz. Finally, entry-level sports utility vehicles from Mercedes-Benz (GLA), Audi (Q3) and BMW (X1) compete with the Hyundai Tucson when it comes to features. And while the Tucson is definitely a looker and a very nice car to drive, in the world of the rich and especially pretentious, landing on the entry-level version of the BMW X1 would cut more ice.
Santosh Iyer, the new Managing Director of Mercedes-Benz India, the first Indian from the world’s ‘first’ carmaker, put it quite simply, “At the end of the day, a watch is a watch, they all tell the time, but successful Why do people want a Rolex or something more exotic? Even with digital watches and fitness trackers, you can get great watches for under Rs 5,000, but you know the Apple Watch Ultra, which costs ten times as much, That’s what other people wear. Same thing with cars, right? Mass-market brands are coming out with many more features, but that’s what builds a brand’s legacy.”
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The Third Factor: Beyond Badges and Pricing
For someone like me who tracks the global car market, numbers matter too. The China story for Mercedes-Benz puts things in perspective for the luxury segment. One of the biggest differences between India and China is the size of the market for luxury car brands. While the figures for December 2022 are not out yet, Mercedes-Benz sold over 593,000 cars in the first eleven months of 2022 in China alone. In India, by its own admission, the carmaker sold just 15,822 units, which it claims gave them half of the luxury car market- that’s about two per cent of China’s number. But in India, it meant a 41 per cent increase from 2021. Another German carmaker, Audi, which saw sales slump after exiting the diesel segment and is only now re-establishing itself, has pegged sales of 4,187 units in India in 2022, a growth of Rs. 27 percent, according to a release. Audi sold over half a million cars in China last year.
All three German brands admit that 2022 would have been even better if it weren’t for the shortage of semiconductors, which would give their highly computerized models a really tough competition. Add to this the paucity of containers and skyrocketing freight rates, which according to him also play a role in keeping sales down. That said, Mercedes-Benz, which has been the market leader in the luxury segment for the last eight years, posted sales in India at only 2018 levels, selling 15,538 cars. But as Iyer points out, luxury car sales in India account for almost the same share of the total market as it does in China. “They still sell between 1.5-2.5 million cars every month in China. In 2022, the overall sales of the automotive industry in India will be just over three million units and 1-2 per cent of the market is for luxury brands in India, right Same as in China.As the Indian market grows, there will be demand for cars from us and I think we can probably grow faster than the overall market.
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allure with luxury
And one way to increase sales of luxury brands is by increasing the ‘value’ proposition. “You have to go ahead of the car,” the BMW driver tells me. “I can’t sell you a BMW and then forget about you, I have to continually do things to reinvent BMW, so that you come back to me in a few years and when your friends or family are considering a luxury vehicle.” If you are staying, then you bring it. them for us. This is one of the reasons why BMW is organizing ‘Joytown’, which is for all intents and purposes a weekend-long funfair, where they will present top-notch concerts but also launch some of their latest two- and four-wheeler offerings . “Joytown is happening in three cities, Delhi, Mumbai and Bengaluru and tickets are sold out.” (Delhi event is already done and Mumbai event is on this weekend)
With the age profile of luxury car buyers getting lower – now in their late 30s or early 40s – events like Joytown make sense. Audi’s various ‘Sports Car Experience’ programs as well as the Mercedes-Benz ‘Golf Tournament’ are part of the same strategy. While these are at a corporate level, local dealerships are also organizing their own events to continuously engage with the customers.
Given the huge growth in demand for automobiles in general and the luxury market in particular in India, Pava believes that in 2022 they would have sold over 12,000 cars (BMW and MINI), semiconductors and freight. Development would not have reduced the issues. He believes that the growth this year for the luxury segment will be in the double digit percentage. And the evolution to be sure, BMW, like its rivals, is going on a launch spree over the next few months – facelifts and new variants included.
Iyer, whose comments a month back on luxury car brands competing with mutual funds with Systematic Investment Plans (SIPs) went viral and received a lot of criticism, quashes the controversy, but points out that though Indians still Working hard to save If “the economy continues to grow and the value proposition that brands like ours offer is amplified in the minds of buyers, then sales can only be one-sided. UP!”
@kushanmitra is an automotive journalist based in New Delhi. Thoughts are personal.
(Editing by Anurag Choubey)