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July 15, 2021
Written By Nabeel A Khan
India’s super-luxury car (priced above INR 2 crore) sales have apparently been on a growth trajectory for the past few years. The niche segment grew more than three fold from about 150 cars in 2018 to about 500 cars in 2020. But the overall volume of the segment remains too low to be significant. Though India is one of the countries having the highest number of millionaires in the world, it doesn’t figure among the top 25 markets for such cars in the world.
New Delhi: In the number of billionaires India is placed third in the world. It has over 7.3 lakh millionaires also. In the global ranking of high net worth individuals India is thirteenth. But this opulence is not reflected in the market for the super-luxury items as a whole and luxury cars (priced around INR 2 crore) in particular. The luxury car market in India has apparently been growing year on year. But the sales volumes are so low that India is not among the top 25 markets for such cars globally.
Sharad Agarwal, head, Lamborghini India
However, India is the world’s fourth-largest passenger car and the largest two-wheeler market. But the market for the super-luxury cars is abysmally low at around 500 units a year. Sharad Agarwal, the segment, despite all the growth in the past few years, had a peak volume of 265 units in CY 2019 which further sank by 30% in CY 2020. For Lamborghini, the peak annual sales volume remained at 52 cars in 2019, which is not even 1% of its global volumes, and declined still further in 2020.
According to Lamborghini India head
Experts say that the performance of other super-luxury products also does not resonate with the number of the ultra-rich citizens in the country. The one big reason for this anomaly is that most of them prefer shopping overseas, especially in Europe, Dubai, and the US~
The biggest challenge, however, is that India has one of the highest tax rates on these super-luxury cars at around 400% on the cost of the vehicle at the time of import. The taxes are the highest as almost none of these super luxury cars are assembled or manufactured in India. They attract about 110% import duty and an additional cost on homologation. Most often these manufacturers assert that the tiny volume doesn’t make business sense to invest in local assembly or manufacturing.
“For us, the overall tax is about 430% on the import cost of the vehicles which is one of the highest in the world,” says Sharad Aggarwal.
For example, the Mercedes AMG- C-360 coupe has an estimated import cost of INR 45 lakh and after all taxes, it costs about INR 1.7 crore for the end-buyers in the country.
Similarly, for Porsche Panamera, the estimated import cost is about INR 52 lakh to INR 55 lakh but it costs about INR 2 crore to the buyers after all taxes. The price doesn’t include the mandatory insurance cost which is also substantially high.
“With the rationalisation of import duties for such high-end cars, we expect the top-end luxury segment to grow even faster and the industry can widen the current customer base. In order to grow this segment Mercedes-Benz decided to localise the AMG portfolio and has now introduced 3 new models which are available at below the INR 1 crore price bracket. This we expect will further increase the demand for such performance cars in India,” Santosh Iyer, vice president – sales and marketing, Mercedes-Benz India, said. He adds that the segment’s volume surged three-fold from about 150 units in 2019 to about 500 units in 2020.
An interesting trend is that more and more customers in the 40-45 age groups are opting for the high-end Mercedes and AMG products. They are mainly super-rich second-generation businessmen, who are well-traveled, luxury dwellers and have experienced these ultra-luxurious cars and products abroad~
Audi India has a similar optimistic view of the market. About the customer trends, Balbir Singh Dhillon, head of Audi India, said, “There has been a shift in consumer expectations – today, buyers want a degree of personalization in the luxury segment and we, not only offer that but also offer these buyers a host of digitization initiatives that allow them to view and customize their favourite Audi from the comfort of their homes. Along with our dealer partners, we are providing customers a seamless experience.”
Lamborghini has relatively younger customers with most of them falling in the age group of 25-45 and many of them are kids of businessmen and a few of them are new generation entrepreneurs.
Other super-luxury car brands that operate in India in this price category are — Rolls Royce, JLR, Maserati, Aston Martin, and Bentley.
In 2019, Rolls Royce said that it sold 5,152 units, claiming that this was the British car manufacturer’s highest sales in its 116-year history. However, the company retailed only one car last month.
BMW India, another German luxury carmaker, did not respond to or share information sought for earlier stories in the recent past. Therefore, we did not reach out to them to participate in this story. BMW has turned conservative in sharing sales and other information with ETAuto after its volumes declined a few years ago.
Source: auto.economictimes.indiatimes.com
