Porsches, Lamborghinis and Mercedes rush through the streets of Delhi and Mumbai as the demand for luxury cars rises in India, a sign that the country’s economy is picking up after the worst of the pandemic downturn.
India’s auto industry has been struggling for several years with higher costs, production cuts and the current global semiconductor shortage, which is depressing sales. But executives said that premium and supercar purchases, while comparatively small by international standards, were approaching their highest domestic levels.
“We’re really optimistic in the luxury segment at the moment,” said Gurpratap Boparai, Managing Director of Skoda Auto Volkswagen India, which also owns the local franchises of Porsche, Lamborghini and Audi. “These are the layers of society that have left Covid faster than the rest.”
The turnaround is a sign of India’s economy recovering as the number of Covid-19 cases declines and rising vaccinations trigger a quick reopening. But it also points to the uneven pace of the recovery as India’s very rich – including business owners and those who have invested in the buoyant stock market – have recovered the fastest from the devastation of the pandemic.
“Most of our owners, and especially high end [vehicle owners], lead successful companies, ”says Martin Schwenk, Managing Director of Mercedes-Benz India. “You had a very good result and a very good profitability. . . and that created a lot of trust. “
Sales of top luxury cars, priced at 20 million rupees ($ 267,000) or more, were nearing all-time highs, executives said. They expect to sell around 280 cars in this category this year, despite the sales disruption caused by the coronavirus, compared to the record of 325 in 2018.
Mercedes-Benz, whose vehicles start at around Rs 4 million, said it sold 4,101 vehicles in India in the quarter ended September, double the number for the same period last year.
“Unlike last year, there was no real hesitation” to start buying cars, Schwenk said after the lockdowns were lifted in April and May.
The auto industry plunged into deep decline in 2019 as the Indian economy slowed and changes in safety and fuel standards increased costs.
Recently, a global shortage of chips has hampered the supply of new vehicles. While industry-wide figures for September have not yet been released, India’s largest automaker Maruti Suzuki reported a dramatic decline for the month, selling just 63,000 cars domestically, up from 148,000 last year.
Ford has announced that it will stop manufacturing cars in India and close its local plants © Kuni Takahashi / Bloomberg
Many foreign automakers have stalled in India. Ford announced last month that it would cease manufacturing cars in India and close its local plants.
But luxury car brands were more optimistic. Mercedes launched several new models in the country this year, including the Maybach GLS SUV, which costs more than 24 million rupees. McLaren was also introduced in the country this year.
Boparai said he expected sales of his company’s lower models like Skoda and Volkswagen would take longer to recover.
But the buyers of high-end cars are less price sensitive, industry figures said. Imported luxury cars are already 100 percent taxed, making them inaccessible to everyone but the richest in India.
Boparai said the market’s growth points to the rise of a more confident Indian business elite, more willing to indulge in luxury brands.
“The younger generation is less reluctant to spend money. India followed the socialist development model [before]. Conspicuous consumption was despised, ”he said. “We have largely moved away from this way of thinking.”
