THE LUXURY CAR MARKET IS EXPECTED TO WITNESS GROWTH DESPITE RESTRICTIVE BUDGET
The Indian luxury car market has massive potential for growth. Penetration levels are 1.1%, which is very little in comparison to other markets similar to India, so there is huge pent-up demand. In the budget of 2016, the Indian government increased various taxes and duties, without attempting to rationalize the tax structure, introducing investment boosting policies, or encouraging investment in eco-friendly cars. This, in turn, increased the cost of the wide range of cars; and manufacturers, like Honda, Hyundai, Jaguar Land Rover, Renault, and Volkswagen also increased their prices due to higher duties.
Despite the uncertain regulatory environment, the demand for all types of cars increased. Thus, to prove it, India’s Auto Expo 2016 saw the launch of both “affordable” and “ultra-high-end” cars, from Audi, BMW, Jaguar Land Rover, and Mercedes-Benz.
The sales of luxury cars are likely to double by 2020, with Audi and BMW expected to pull ahead of the current market leader, Mercedes-Benz. However, the company expects double-digit growth in the near future, owing to its strong line-up of product launches, including 12 new offerings and 10 new dealership inaugurations across various markets.
INCREASE IN THE DEALERSHIP OF LUXURY CARS IN INDIA
Some of the factors driving the growth of the Indian luxury car market is the power, recognition, prestige, and status associated with the ownership of luxury cars. India, being home to over 4% of the world’s billionaires, has a pocket to afford luxury cars; and hence, luxury car manufacturers are planning to establish their showroom, pan India.
Looking deeper into the fact, brands like BMW, Mercedes, Audi, and Jaguar have geared themselves to increase sales volume in India. Considering the scenario of Mercedes Benz, the company has the largest footprint, with presence across 37 cities, while BMW and Audi have their presence across 20 and 18 cities, respectively. Jaguar and Land Rover have 15 dealerships across 13 cities. These brands are focusing on the future markets in cities, like Raipur, Calicut, Dhanbad, Indore, Surat, and Jalandhar, which in turn, has increased the demand for luxury cars.
OVERALL GROWTH OF THE MARKET STUDIED
The country’s luxury car segment has been witnessing high growth rates and expanded at a CAGR of 37% between FY 2007 – 2015. In 2016, the sale of luxury cars stood at 33,279 units in 2016. Additionally, the luxury car market in India is expected to grow at a CAGR of 25% till 2020. Mercedes-Benz India and BMW Group India recorded their highest-ever annual sales in 2017 at 15,330 units and 9,800 units respectively.
For a third consecutive year in 2017, Mercedes-Benz India continues to be the best-selling luxury brand in India by registering a record sale of 15,330 units in the January to December period. The company’s volumes increased by 15.9% and registered highest ever yearly sales.
BMW Group India delivered 9,800 vehicles (BMW + MINI) in 2017, registering a growth of 25% when compared to 2016, thereby becoming the second best-selling luxury car brand in the country; and Audi India stood at the third position with annual deliveries in the market for 2017 stood at 7,876 units.
About the Indian Luxury Car Market
The Indian luxury car market is expected to register a CAGR of 23% by the year 2023. Mercedes-Benz and BMW Group have recorded their highest ever annual sales in 2017, at 15,330 units and 9,800 units, respectively.
Mordor Intelligence is a market intelligence and advisory firm, operating in 14 industry segments, and serving over 600 clients, worldwide.