Porsche AG’s executive board member for sales and marketing Detlev von Platen and vice-president of region overseas and emerging markets Matthias Becker will be in India later this month, while senior executives from BMW’s headquarters are scheduled to fly in during the festive season in October.
Ola Kallenius, chairman of the board of management at Mercedes-Benz AG, Andre Konsbruck, VP for overseas sales at Audi AG; Nick Connor, head of Volvo Cars in Asia Pacific; and Francesco Scardaoni, region director, Automobili Lamborghini Asia Pacific, have already visited the country in the past few months.
These are among about a dozen top executives of luxury-vehicle companies who have already visited India or will be here soon to review their growth strategies for this market.
India is still not a huge market for top-end luxury vehicles – industry estimates suggest sales volume in the first half of 2023 at around 20,000 units – but is growing fast and sales are estimated to top 100,000 units in the next 10 years. As per a report by property consultant Knight Frank, India ranks sixth in the pace of growth in the number of self-made people with net assets of $30 million or more and are under the age of 40 years – a key customer segment for luxury products including vehicles.
The increased focus on India comes at a time when its economy is projected to grow at a healthy pace even as several advanced economies including the US, Germany and the UK are beset with recessionary risks. The International Monetary Fund last month raised India’s GDP growth forecast to 6.1% for this fiscal year. In comparison, the US is expected to grow by 1.8% and the UK by 0.4%, while the German economy is projected to contract by 0.3%.
India is also a place for research & development and testing new offerings for some of these companies.
For Mercedes-Benz, the leader in luxury vehicles here, India was one of the first markets where it implemented the model of selling vehicles directly to consumers. Usually, automakers sell vehicles to dealers who then retail them to consumers.
“India has been a front runner in implementing the new D2C model-retail of the future and also is a significant contributor to the R&D activities at HQ with a dedicated set up in Bengaluru. There is a lot of curiosity to know more about Indian operations and that is very encouraging,” Mercedes-Benz India managing director Santosh Iyer said.
The Indian market – among the few to have rebounded and expanded strongly after the pandemic – is already the fifth largest for Mercedes-Benz in the overseas region. The country is slated to be among the top three growth markets in Asia (excluding China and Japan) by next year for Lexus. This calendar year, India is expected to be among the top five markets for the Japanese luxury carmaker in the Asia-Pacific region, up from being among the top 10 in 2022.
“We have already outdone the total sales of 2022 by July 2023,” said Naveen Soni, president of Lexus India.
For motorcycle brand BMW Motorrad, sales in India doubled last year, pushing up the country to among the top 10 markets for the company in the world. India was, in fact, the fastest-growing market last year for Mercedes-Benz, BMW Motorrad and Volvo Cars, and the momentum seems to be going strong well into 2023.
“This is going to be the best-ever year for luxury-vehicle sales in the country,” said Balbir Singh Dhillon, head of Audi India. Audi AG expects the India subsidiary to more than triple its sales volumes over the next couple of years on the back of multiple new launches, better availability of semiconductors globally and strong demand for luxury cars.
Luxury vehicle sales peaked at about 40,000 units in 2018.
“This market has seen structural changes. The average age is getting younger and there is a higher share of women buyers,” Mercedes-Benz’s Iyer said.