2012, AUTOMOBILES, COLUMNS, FEATURED, latest-stories, MAY 2012, SECTORS

Luxury cars: A mass success

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Annurag Batra, Chairman & Editor-in-Chief, Pitch
Annurag Batra, Chairman, exchange4media Group & Editor-in-Chief, Pitch

Annurag Batra, Chairman, exchange4media Group & Editor-in-Chief, Pitch

The world of luxury has always been surrounded by an aura of exclusivity, desirability, and opulence. Once the lavish indulgence of a numbered few, with a majority comprising the cosmopolitan elite who would pick up international luxury brands in their travels, and the rest being corporate czars and wealthy businessmen, more and more people are jumping on to the luxury bandwagon. Is luxury in India becoming mass? Is there a new normal luxury? Is the title of the article oxymoronish and is representative of changing times.

The one segment which is seeing tremendous promise and a flurry of activity in recent years, with a slew of international brands coming to Indian shores is the luxury cars market.  According to a report by MarketResearch.com, the luxury market in India which currently stands at US$4.76 billion is set to touch three times its current size by 2015, of which luxury cars occupy the major share.

In the past few years, the luxury car market in India has come a long way from the undisputed, unrivalled leadership of German automaker, Mercedes Benz, to almost every car enthusiast’s dream car now available in India. With 48 U.S. dollar billionaires in India, according to the Forbes list, India has become a top destination for luxury car makers. Enhanced excise duties and import duties have failed to put a dampener on the luxury auto segment in India even though the prices of imported cars have witnessed a rise post the union budget.

In the vast pool of luxury car makers who are vying for a share of the luxury car market in India, German auto majors, BMW, Mercedes, and Audi continue to rule the roost. Tata-owned Jaguar Land Rover, Volvo, Rolls Royce, Bentley, Porsche are other prominent names that figure high on the consumer’s wish list. Last year saw Italian sports car maker, Ferrari and UK-based luxury and sports car maker, Aston Martin launch their fleet of cars in India, priced upwards of one crore, taking the luxury car segment to a whole new level.

Luxury car segment is clearly undergoing a redefinition in India. With greater disposable incomes and global awareness, these uber expensive cars are not just the fancy of the affluent elite anymore. Several of the premiere auto brands are leveraging this trend and doling out low-cost luxury cars to tap the growing club of value-conscious Indians looking for luxury at an affordable price.  Even though this entry-level segment equates to lower margins, but owing to current market trends, it is a great way to create brand loyalty. Popular offerings in this entry level luxury car segment include the recently launched Mercedes-Benz C-Class, BMW 3 Series, and Audi A4, among a host of others.

German auto majors like Mercedes, Audi, and BMW which earlier belonged to the high-end, super luxurious segment are now perceived as affordable luxury in comparison to the entry of luxury cars like Maybach, Bentley Arnage and Rolls Royce Phantom, Bugatti, Italian sports car Lamborghini, and recently launched Ferrari, which begin from 1 crore and go up to a whopping 20 crore.

According to estimates, close to 20,000 units of luxury cars were sold in India in 2011, which is slated to go up to 1, 50,000 units by 2020. Moreover, as per the findings of a report by Society of Indian Automobile Manufacturers (SIAM), within passenger vehicles, the number of passenger cars sold by BMW India increased from 3,171 units to 3,442 units, while the sale of utility vehicles rose from 256 to 2,453 from the 2010-11 to 2011-12.

For Mercedes Benz, the number of passenger cars sold increased from 2,731 to 3,098 units and the number of utility vehicles sold witnessed a rise from 197 to 403 units. And for Volkswagen-Audi, it was an increase from 1,205 to 2,319 units for passenger vehicles and from 687 to 1,062 for utility vehicles.

If the figures are anything to go by, the appetite for luxury cars in India clearly remains unsatiated.

About the author / 

Annurag Batra

Chairman, exchange4media Group & Editor-in-Chief, Pitch/pitchonnet.com

1 Comment

  1. Deepak Bhatt June 11, 2012 at 3:35 PM - 

    Just like some photographers need to own Leicas, some drivers must have a Mercedes or a BMW. Once you achieve a certain station in life, then you surround yourself with all the standard accessories.

    People with ordinary jobs can drive ordinary cars, but if you ever become a mid level manager, then you need to be seen driving a mid level car. If you’re a high level manager, or a doctor or lawyer, then you absolutely need a luxury car, to prevent clients, subordinates, customers, or patients from thinking you might not be good at your job.

    Incidentally, this works in reverse too. I once knew an appliance repairman who drove a beat up old pickup truck, despite the fact that he did very well, earning six figures a year. I once asked him why he didn’t get a nice car. He replied “If I drove a fancy car, then my customers might think I charge too much.”

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