The luxury car market in India has continued to grow at an impressive pace over the past decade, with 2016 being the only exception. However, luxury automobile manufacturers saw tepid sales last year with the segment witnessing a year-on-year growth of just 4.4 per cent. A number of reasons can be attributed to the slump, which include tighter liquidity conditions, increased upfront insurance costs, increased lending rates and lack of clarity on the fate of diesel cars. And, until now, 2019 has been even worse for these manufacturers as the numbers suggest that the luxury car market shrank by as much as a quarter in the first half of this year, with the elections and the slowdown in the economic growth, which weighed on buying sentiments. Despite the market slowdown, top luxury brands are still optimistic about India and predict that things will begin to improve over the next few months. One of the main reasons is the steady rise of the affluent middle class population in the country. The number of luxury cars sold in India as compared to the total demand is lower than one per cent. By comparison, luxury vehicles in developed markets typically account for around 5-6 per cent of the overall market. Although, this highlights the dismal penetration of high-end cars in the Indian market, luxury carmakers view this as an untapped opportunity with huge growth potential.
The arrival of ultra-luxury cars
While the leading luxury automobile manufacturers continue to be cautious of the market challenges and the fall in sales, their effort to continually update and expand the product line-up is a testament to the optimistic outlook for the Indian luxury market. Most of the high-end cars, over all the major segments, that were introduced in the international markets over the last year and a half, have made their way to Indian shores. The ultra-premium segment saw several major launches take place over the last couple of months, with BMW leading the charge. The Bavarian carmaker recently introduced its newest flagship SUV, the X7, in India. The full-size luxury SUV is BMW’s biggest offering ever and has three-row seating to fit seven people. While the range-topping xDrive40i makes its way to India as a Completely Built Unit (CBU), the xDrive30d will be produced locally, which has helped the German brand give it a competitive starting price of `98.9 lakh (ex-showroom, India). As one would expect, the luxury SUV is packed to the gills with all the top-tier features and creature comforts, which it shares with the recently updated BMW 7 Series. In fact, both the cars are so similar in styling and features that BMW launched the two models together in India. The BMW X7 and the 7 Series both get thin headlights and tail lamps, plenty of chrome and massive kidney grilles – the largest BMW has ever fitted to any of its production cars.
The rise of localisation
In line with global luxury market trends, the SUV segment in India saw the maximum action with car manufacturers rushing to launch their high-riding vehicles in the country. Tata Motors-owned Jaguar Land Rover (JLR) is experiencing a slowdown in sales in international markets, but the iconic British brand is steadily improving its market share in India after being on the fringes for long. Land Rover launched several new as well as updated models from its product portfolio in India over the last 12 months. While it gambled with extremely low volume, and niche products like the Range Rover Evoque Convertible that was launched last year, it also directed focus on localisation of production. The luxury brand has started manufacturing the Velar in India, which has not only brought down the price, but also supports the government’s ‘Make in India’ initiative. The India-made luxury SUV starts at `72.47 lakh (ex-showroom, India), which is cheaper by more than `6 lakh thanks to localisation. The other major launch from JLR came in the form of the 2019 Range Rover Sport, which was introduced in India, back in May, with a starting price of `86.71 lakh (ex-showroom, India). The carmaker claims that the flagship model has been integral in driving demand for the Land Rover portfolio in India.
The three-pointed star dominates
Mercedes-Benz India continues to maintain the top spot in the luxury car segment, despite the dip in sales. The German carmaker claims there is growing level of interest shown by Indian buyers, which is mirrored in the company’s surprise decision to launch the V-Class luxury van in India. The carmaker has also been the pioneer of future-proofing its cars in India by being one of the first brands to launch BS6 compliant cars, including the new LWB BS6 E-Class available in both diesel and petrol. The long-wheelbase variant of the E-Class has been a runaway success in India and the latest-generation model is crucial to the German automaker’s product offensive. Mercedes is also upbeat on demand for high-performance cars in India and has steadily expanded its AMG portfolio in the country. The latest generation Mercedes-AMG G63 was launched in India within a few months of its international debut. The ultra-luxury SUV, introduced at `2.19 crore (ex-showroom, India), comes with a long list of updates, which has made it thoroughly modern but without altering its iconic aesthetics. The automobile industry as a whole is going through a massive transitional phase with the focus moving away from internal combustion engine to electric cars, which along with a slump in the world economy has created uncertain times for car sales. How will the Indian luxury car market respond while dealing with local challenges and headwinds remains to be seen.
Dhiram Shah
