‘The luxury car market could potentially double by 2030': Santosh Iyer
Santosh Iyer, Managing Director of Mercedes Benz India says a favourable change in perception towards acquiring luxury cars and strong economy will drive the market to new highs.
As the Indian economy strengthens and the number of high-net-worth individuals rises, the aspirational aspects are also reflected in high-end lifestyle purchases and luxury cars are usually among the top acquisitions. Santosh Iyer, MD of Mercedes Benz India says the Indian luxury car market will continue to grow in double digits in the coming decade, outpacing the mainstream market by 2-3 percent as the favourable change in perception towards acquiring luxury cars and growing economy will drive the market to new highs.
At a base of 37,000 units at the end of 2022, considering even a lowest double-digit growth of 10-12 percent, the Indian market may double to over 80,000 to 90,000 units per annum sales mark by 2030.
Speaking on the sidelines of the all new GLC launch, Iyer told Autocar Professional, the compounded annual growth rate of around 10 percent is a “very reasonable number” for the luxury car market. Declining to give a specific number guidance, Iyer said, “If you look at the total passenger vehicle market, it has grown by 6-8 percent and the luxury market growth has been 8-10 percent, which means luxury
penetration is slowly increasing. From 0.9 percent of the overall market, it is close to 1.1 percent. It is a slow steady penetration, but I think, to be very pragmatic, I think double digit growth in the region of 10 percent is what can be sustainable.”
Besides, post Covid-19, the luxury car market has bounced back with vengeance growing at almost double the pace of the mainstream market – on account of a low base.
So far, in the first half of this calendar year, the total market has crossed the 20,000 units, with a higher second half due to the festive
season, the luxury car market is on course for a new peak of 43,000 units this year, say industry players.
Iyer said there are two critical aspects for future growth of total industry volumes — the economic development and the cultural development. He said all the economic parameters of strong corporate results, high GST collection and a growing economy have helped the market to grow at a very healthy pace so far and as the nation moves towards a US$5 trillion economy, with a younger demographic, the market should eventually hit a take-off point.
“The culture transformation is happening, it’s a bit slower, but there will be an inflection point when they both come together in a significant manner, post 2030. Then one may see growth will accelerate beyond low double-digit growth,” he added.
Mercedes Benz India today is the largest car maker in the country where it assembles about 14 models at its factory. The range includes the entry-level A Class, to the top-of-the-line AMG performance cars and EQS EV. Thanks to the rising demand and a significant order backlog of over 2,500 to 3,000 units, the company had added a third shift to cater to the waiting customers.
With the launch of the GLC, the order book has further swelled to about 4,000 units, with the new mainstream SUV, generating 1,500 units of orders amounting Rs 1,000 crore in revenues within 15 days of opening the bookings, which Iyer claims is the highest ever for a new launch in such a short span of time.
The head of one of the largest luxury car makers in India says the introduction of new models continues to drive sentiment as well as the momentum in the market and his company has lined up four new models for the rest of 2023, to keep the excitement high. And for him the biggest priority is to build the desirability of the brand over volumes. In line with the global vision, the company’s top-end vehicle or TEV portfolio priced over Rs 1.5 crore has been the fastest growing segment accounting for almost 25 percent of its overall sales.
This feature was first published in Autocar Professional's August 15, 2023 issue.
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