New Delhi: Carmakers in India sold an average of 128 cars priced more than ₹50 lakh every day last year, up from 95 per day in pre-Covid 2019, taking the total luxury car sales to a new calendar-year high.
Carmakers attribute the pickup in sales to a lifestyle change post Covid-19, making many younger professionals opt for high-end automobiles, and robust corporate earnings, and they expect the trend to continue, citing rising income levels and low penetration of luxury cars in the country.
As per industry estimates, a record 46,000-47,000 luxury vehicles were sold in the country in 2023, an increase of 21% over 38,000 units reported the year before and 35% over 2019.
While top two players – Mercedes-Benz and BMW – are yet to announce their India sales for 2023, Audi on Friday said it increased its sales by 89% to 7,931 units in 2023 from 4,187 in the previous calendar, outpacing the overall industry growth rate.
Balbir Singh Dhillon, head of Audi India, said in addition to the traditional business community, the German luxury carmaker last year saw a huge surge in demand from salaried professionals, doctors, lawyers, and chartered accountants, who have been making purchases triggered by the YOLO (‘you only live once’) mindset.
“As much as 42% of our sales now are to consumers aged less than 40 years,” he told ET. “In India, financial freedom to make a high-ticket purchase (INR 50 lakh and above) earlier was with buyers aged above 50 years. The change in age profile which we are seeing among our buyers indicates wealth is spreading out across brackets.”
As many as 58% of Audi buyers in India are now less than 50 years of age, he said.
Low Penetration of Luxury Cars
For Mercedes-Benz India, the average age of the E-Class customer is now 38 years, while that of the C-Class buyer is 35 years, compared with 45 years and a half a decade ago. The share of salaried professionals among its customers has more than doubled to 15% in the last two years, the German luxury carmaker said.
“We witnessed structural changes in the luxury car segment with more young professionals and women buyers opting for a Mercedes Benz than before,” said Santosh Iyer, managing director and CEO of Mercedes-Benz India. “2023 was our best year ever,” he added.
BMW India also now registers the bulk of its sales to consumers aged 35-40 years. The corporate sector accounts for one-third of its overall volumes, the German luxury carmaker said.
India’s changing corporate landscape is putting more money in the hands of salaried professionals, doctors, lawyers, and start-up entrepreneurs, leading to an increase in indulgence quotient and spurring sales of luxury vehicles, industry insiders said.
Strong corporate earnings, hefty payouts on employee stock ownership plans (ESOPs) and a sustained recovery in economic growth since the pandemic has resulted in rich young achievers, Mercedes-Benz’s Iyer had said in a recent interaction.
The potential for luxury carmakers in India is huge, given that it is the fastest-growing major economy in the world with one of the highest number of billionaires and a low penetration of luxury cars.
The share of luxury vehicles in India’s automobile market at a little over 1% is among the lowest among major economies.
Even in a country like Taiwan, penetration of luxury vehicles stands at about 20%, Audi’s Dhillon said.
“The per capita income in India is about $2,500. In many South Asian countries, it is much higher. As income levels go up, sales too will increase,” he said.
Additionally, the transition to electric vehicles will help support sales in this segment, industry insiders said.
The government levies GST of only 5% on EVs, compared to 48-50% on petrol and diesel vehicles. Local assembly of electric vehicles will help bring down costs and make these cars more affordable.
Dhillon said Audi is studying the viability of commencing local assembly of EVs in the country. “It is not a question of if, but a question of when,” he said, adding he expects nearly half of luxury car sales in the country to come from electric vehicles in the next five years.
High customs duties, GST, and road taxes on imported internal combustion engine vehicles currently can raise prices of imported cars by up to 4x in India, which impacts sales of luxury vehicles in the country.
Sales of cars, sedans and utility vehicles at the more affordable end of the market grew by 8% to 4.1 million units during the year.
