The Indian luxury car market is set to grow at almost double the pace of the mainstream car market and post a over 30 percent rise in sales in 2022.
In the passenger car hierarchy, luxury and ultra-luxury cars sit on top of the pyramid. However, when the top segment ends the year at 35,000 units, there’s more to celebrate.
This is the second consecutive year of over 30 percent growth for luxury car makers, who had seen the volumes almost halve to about 20k cars between 2018 to 2020 were pulled down by a slowing economy and Covid-induced problems.
The industry could have scaled a new peak if not for the shortage of parts like semiconductors. While, the industry is still about 6,000 units away from its previous peak of 41k cars in 2018, Autocar Professional learns the industry is sitting on an order book position of 10k cars or almost three-month sales with waiting period running into 3 months to a year, depending on the model.
A significant bounce back in demand can be attributed to quick recovery in the Indian economy post re-opening of markets after covid-19 pandemic that triggered a revenge buying at the top end of the passenger vehicle market.
Mercedes Benz and BMW India, the country’s top two car makers are set to post their highest ever annual sales in 2022. Santosh Iyer, VP, Sales and Marketing at Mercedes Benz India told Autocar Professional the demand has remained very healthy throughout the year and one expects the market to sustain this growth in the coming year.
“With the improved supplies, we have ramped up our capacity, but despite improved output, the demand is still outpacing supply. With a sustained product action and improvement in Indian economy, we expect this momentum to continue in 2023,” added Iyer.
With the rising incomes and evolving customer needs, the Mercedes Benz has started witnessing two interesting trends. The demand at the top end,that is above Rs1 crore continues to grow the fastest and second is the rising share of salaried buyers in its portfolio, which augurs very well for the future growth of the market.
“Pre-Covid our high end cars,that is priced above Rs 1 crore use to account for 10-12 percent of our total sales that number has now jumped to 22 percent,”Iyer says.
In the year gone by, the market had witnessed over a three dozen new model interventions that ensured sustained excitement in the market place.
Vikram Pawah, president of BMW Group India says Covid has made people realise not to wait for things but start living their lives in the moment. It has also enabled people to take a pause and be with their families and spend more time
“In India, we always had the money, especially in our customer group, who love spending on the latest and the greatest in the world. And this made us launch our products consistently since 2021,” said Pawah. With close to half a million luxury cars sold over the last decade, majority of the buyers are now looking for an upgrade of their existing cars and there are many who are looking at the second car in the family, which is offering heft in demand.
Balbir Singh Dhillon, head of Audi India says the market is back to its glory days and the demand has remained strong for most part of the year.
"Indian luxury car makers have never seen such high level of orderbook. Supply is not being able to keep up with demand. This growth is despite 10-15 percent increase in vehicle prices. The economy is doing well, the liquidity is strong and with the moderate interest rates has led to healthy sales. We are likely to grow by 30 percent this calendar year,"
The head of the top three luxury car makers are of the opinion that this double digit growth is likely to continue in 2023 as well, however there are some headwinds the market may encounter. India is not detached from the global recession and inflation is putting pressure on the pricing globally which may have an impact on prices at which vehicles are imported in the country and the semiconductor shortage is still not over.
Dhillon says what remains a concern is that the market still continues to be just 1 percent of the overall passenger vehicle market. “With the number of high networth individuals, the penetration has a potential to reach three to five percent of the overall market,” added the head of Audi India.
This feature was first published in Autocar Professional's December 15, 18th Anniversary issue.
Passenger car market all set to scale new peaks in 2022
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