India’s Luxury Car Sales Are Booming in 2022: Why?
International corporate companies have always been drawn to the Indian market. The Maharajas of yore, the ultimate buyers of luxury consumer products, serve as a historical display of their long connection with the luxury and lifestyle goods business. Several companies have enjoyed great success, whether in the fields of fashion, accessories, beauty, health, or automobiles.
Everything halted for a few months in 2019 when the deadly virus struck. Industries suffered, and the state of the world economy was dire. The following months were unpredictable and full of concern as the globe limped towards normalcy.
A few years later, the Covid-19 pandemic’s effects on the planet have come back with a vengeance. The market for luxury vehicles has recovered pre-pandemic sales levels and is expected to continue to expand. The Indian luxury car market, which was valued at USD 1.06 billion in 2021, is anticipated to grow by 7% CAGR to USD 1.54 billion by 2027.
“We have a giant order book going into 2022. The trajectory is encouraging based on what we have observed in the first five months, “says Sharad Agarwal, head of Lamborghini India.
“Since Covid, the market has made a significant recovery. One of the most acceptable requests we have ever seen in India is what we are seeing right now. We completed about 4,000 automobiles during the first quarter and currently have an order bank of about 5,000 cars. Santosh Iyer, vice president of sales and marketing for Mercedes-Benz India, stated, “We have never witnessed such a high booking, order bank.
Indian consumers and luxury automobiles
Mercedes-Benz entered the Indian market as the country’s first premium automaker in 2004. It had a market hegemony up until 2006 when BMW debuted there. Audi soon after, in 2007, followed suit.
These three businesses have competed for the top rank in terms of sales volume over the years and have occasionally supplanted one another. The leading cause of this was the introduction of new products, especially the more minor and more affordable variants.
These top three businesses saw a significant increase in revenue and YOY growth in 2010. This resulted from an increase in the number of wealthy people. The Indian economy and available income were both booming. This indicated a rise in customer confidence and readiness to spend money on a high-end vehicle.
The automotive industry’s worst setback occurred in 2016. Demonetization is the primary justification. Of course, the reduction in diesel car sales during the first half of the year also played a part. Thus, the industry experienced a significant decline in sales volume for the first time in ten years.
The Indian government revised its luxury car-specific GST system in 2017. The luxury automobile market recovered, and the sales number was back on track in spite of this and the moderate rise in total sale volume. For all of the luxury automobile manufacturers in the Indian market, 2017 ended up being the most suitable year.
Why Did Sales of Luxury Cars Increase in India?
While the sector saw ups and downs during the following ten years, overall optimism remained, as seen by sales figures. Even the typical buyer age decreased, going from 45 to the mid-30s.
A new India and a new breed of businesspeople were developing. Companies have started giving graduates from prestigious universities and institutions larger and healthier salary packages. All of this increased the number of high-net-worth individuals, expanding the pool of potential purchasers. The country’s tier 2 and tier 3 cities saw economic expansion and development, which increased demand for luxury vehicles in these areas as well.
There is a good explanation behind the recent increase in demand and the optimism regarding future expansion and demand for luxury automobiles in India.
- India is now producing the second-highest number of billionaires worldwide.
- In contrast to the third or fourth generations earlier, today’s consumers are first-generation business owners.
- The clientele has grown significantly.
- To avoid paying hefty import charges, luxury automobile makers have boosted the localization of production, manufacturing, and assembly.
- This has significantly lowered the overall cost of these automobiles, making them appealing to the Indian market’s price-sensitive consumers.
- A sizable market niche has also been identified for previously acquired premium vehicles.
The introduction of electric cars is the other area of the luxury automobile industry that is creating a stir with the younger generation. It is a desirable purchase since electric vehicles are supported by cutting-edge technology. Most luxury automobile manufacturers are entering the electric vehicle market and preparing to localize their products to lower consumer costs.
Future of Luxury Automobiles in India
India is a price-sensitive market overall, and this is true even in the premium luxury sector. Luxury automakers have investigated, comprehended, and responded to market issues in India.
Given that just 1% of these brands are now sold in the Indian market, there is significant room for development in this market category. The Indian economy is expanding quickly, and a new generation of billionaires is emerging fast. Therefore the future is looking well.
Conclusion
With each new introduction and vehicle, it is anticipated that new players will enter the luxury automobile industry. This segment’s growth appears to be lucrative and is being fueled by network development, greater market penetration with new and used automobile dealerships, and expansion into supplementary services like car finance and customization.
FAQs
Which luxury vehicle is the most popular in India?
In India, the Mercedes-Benz E-Class is the most popular luxury vehicle. In FY22, the luxury automobile manufacturer sold 2,839 units.
What has happened to India’s appetite for high-end vehicles?
The COVID 19 lockout had an influence on the market for luxury automobiles, but in 2022, it dramatically increased.
Is the demand for premium cars expanding?
The market for luxury vehicles was estimated to be worth USD 1 billion in 2021 and is predicted to grow to USD 1.54 billion in 2027.
