Luxury car sales in India continued to rise in the March quarter, the first of the 2023 calendar year, reflecting undiminished demand in a market segment largely unaffected by inflationary and recessionary concerns overseas.
As per industry estimates, more than 9,500 luxury vehicles were sold in the country in the first three months of the year – an increase of nearly 10% over the same period last year.
Steady domestic economic growth amid signs of moderating inflation, coupled with strong corporate earnings, is fuelling demand at the higher end of the market and supporting sales of luxury vehicles. Within the luxury segment, too, demand was stronger for top end vehicles (TEV) priced upward of Rs 1 crore, said a senior industry executive.
At market leader Mercedes Benz, sales of top end models, in fact, more than doubled in the first quarter. Top-end vehicles accounted for nearly one out of every three vehicles sold by the German carmaker in Q1.
“Even within the luxury segment, we are seeing an increased preference for high-end models,” Santosh Iyer, Managing Director, Mercedes Benz India, told ET. “This is an encouraging sign, indicating mature buyers in the market here.”
Iyer, who was speaking on the sidelines of the launch of Mercedes Benz’ most powerful production car AMG GT 63 S E-Performance, said overall demand for luxury vehicles remains strong.
“Our inquiry levels and order intake have not come down. The challenge currently is to reduce the waiting across product lines,” he said.
German Dominance
Compatriots BMW and Audi are yet to report sales for the first quarter in India. As per data available on the VAHAN portal of the Ministry of Road, Transport & Highways (MoRTH), BMW’s sales declined 11% to 2,418 units in Q1, Audi India’s sales rose 63% to 476 units in the same period. The numbers are incomplete as some regional transport offices are still not linked to the Vahan portal, but these are seen as a proxy for the trend in the automobile retail market, as manufacturers only disclose their dispatches from factories.
Vikram Pawah, President & CEO, BMW Group India, in a recent interaction said the company launched 7 vehicles in the first two months of the year and received orders for 5,500 cars. “Supplies should also improve June onwards. Our focus is to reduce the waiting period on our vehicles to three months, from the current 5-6 months,” he said.
To be sure, penetration of luxury vehicles at less than 2% of overall car sales here is among the lowest among major economies in the world. However, Pawah said the potential for growth for luxury carmakers in India is promising given that it is among the countries with the highest number of billionaires.
“India is the only country growing at a fast pace globally. Inflationary pressures here are under control, when you compare with developed countries. Local demand continues to be strong, which makes us optimistic,” he said.
The peak annual luxury car sales recorded in the country so far is about 40,000 units in 2018.
As per a report by property consultant Knight Frank, the number of people in India with net assets upwards of USD 30 million grew 11% in 2021 to 13,637, accounting for the highest share in the Asia-Pacific region. The number is expected to increase 39% during 2021-2026. At present, India ranks sixth in percentage growth for such self-made and below-40 millionaires.
