| When it entered India in February 1996, DaimlerChrysler was the first premium car manufacturer to drive on Indian roads. Nine years later, seven international luxury car brands—from the sporty Porsche to the regal Rolls-Royce—are jostling for space in the garages of India’s rich and famous.
With growth rates of 28%, it is the luxury car segment that is racing in top gear. Of the 20 new models to be launched in India during the second half of this year, several are luxury models.
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For many Indians, cars are more a lifestyle statement than a status symbol. Mohan
Mariwala, a Mercedes Benz dealer in Mumbai, says fuel efficiency and price tags are no longer the main deciding factors for the buyer. “Design and appeal in addition to a brand,” he says, “are the strongest drivers in the luxury and super luxury segments, such as Mercedes Benz.” “Our aim is to provide them with a wider range and the newest internationally launched products,” says Mr
Mariwala. |
Among the cars on display in his showroom, there are more than just a few that cost more than what the average Indian will earn in a lifetime.
As if a price tag of $250,000 is not enough, Indians fancy buying even more expensive ones, such as Ferraris and Aston Martins, which are slated for launch in India later this year.
According to Rajesh Jejurikar, vice-president of Indian auto major Mahindra and Mahindra, booming sales have “expectedly” changed the perception of foreign investors, for whom the Indian market, or rather the lack of it, was a laughing stock not so long ago. “The past two years have completely changed the way the world views India,” he says. “Now, everybody wants to be here.”
| In the past four years, India has not only seen launches of a plethora of foreign marques, but owing to “its low-cost, high-quality manufacturing”, says P Balendran of General Motors, India, it has also emerged as a significant outsourcing hub for auto components and auto engineering design, rivaling Thailand. This is why, perhaps, India is now getting all the variety and attention that were so far reserved for mature car markets. A slew of new models is being lined up for launch next year, including 11 “super luxury” cars from celebrated brands like Audi, BMW, Ferrari and Alfa Romeo. |
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| The roll-out in the luxury segment has already begun with a Bentley model, two Porsche best-sellers and Mercedes Benz’s
Maybach. |
A liberal economic regime during the past 15 years has seen the rich becoming richer and the richer even wealthier.
As a result, those who had scooters or motor bikes are now buying cars and those driving small and inexpensive cars are upgrading to more expensive cars.
Mohan Mariwala at the Mercedes dealership says this is pushing up the demand for luxury cars. A lot of customers driving Hondas and similar cars come to him to find out about Mercs, he says. Last year more than one million cars were sold in India. And sales figures are expected to surge for another 10 years. That makes India an extremely attractive market for international car giants.
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Rising disposable incomes, a changing lifestyle and foreign travel are being attributed to the growth of the car industry. But experts believe the main driver of the Indian car market is the availability of car finance on easy instalments and reasonable interest rates. Banks are bending over backwards to lure customers in need of car loans.
Customers paying top dollar for fancy cars expect fancy service too. Premium car makers will find that while it’s easy to serve the metro car buyer, those in the hinterland are a different proposition. And there are plenty of them there. A report by the National Council of Applied Economic Research emphasises the need for an efficient service network: one in four households that earn over Rs 1 crore a year is based in small towns and rural areas.
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DaimlerChrysler found that out for itself: demand for the Rs 65-lakh S-Class comes from such unlikely places as Ludhiana and
Bhiwandi. From 15 service centres in 2000, it now has 22 dealers.
An analyst says brands like Toyota reach where the Audis and BMWs have not yet cast their net. He adds, “An established sales and service network can make a real difference. Which is why the Toyota Camry and Land Cruiser eat into the sales of others.”
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Bentley, though, has found a way out that also works as a subtle brand builder: at Rs 1.7 crore a car, it does not—should not—need much after-sales support. So, when it does, Bentley simply sends the mechanic over for a house call.
That’s something Mercedes and the other players in the luxury market could emulate.
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