New found wealth fuelling demand for flashy cars in India

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Managing director of Performance Cars Lalit Chaudary poses with an Aston Martin V8 during its launch in Ahmedabad late on 21 May, 2011. United Kingdom based Aston Martin joins Ferrari, Maserati and Volkswagen AG's Bugatti and Lamborghini units in India with the company launching three models for the country's sports car enthusiasts. Photo - Sam Pankathy/AFP/Getty Images

From the last few years, flashy cars have made a big impact in the Indian car market and has registered a meteoric rise in sales. Executives and CEOs in India are finding themselves incomplete without owning a sleek Germany or Italian-made sports car, a sign of wealth on Indian roads. No nightclub or corporate company car parking in India is without an Audi or Ferrari sports car, another sign of how the boom of flashy cars is taking the country by storm.

?There is a rush to buy a luxury car in the market. Farmers, tiny industrial families, the younger generation with different value systems…You can’t imagine the kind of people who invest in extremely exotic cars today,??Mohan Mariwala, MD of Auto Hanger in Mumbai, said.

Industry analysts and research firms claim Asian luxury car industry is worth $1 billion?and is expected to grow by 40% in near future.


Mumbai holds a super car parade every now and then at the seafront which attracts huge numbers of youth. People drive in their luxury cars to the location and engage in ‘fast and furious’ style showoff and stunts. On the other hand, Facebook groups of luxury car are generating an exciting chatter with appealing photographs of bling cars, including Aston Martin Rapide, a car that costs $300,600 in a country where average income of the middle class person is $1.25 a day.

?The new Indian luxury consumer is pursuing a lifestyle where owning exclusive items and owning them first is the clear sign of wealth and power,??Andrea Baldi, Southeast Asia and Pacific Sales Manager for Lamborghini, noted.

He also added: ?India?s young population is affluent and dynamic, the environment is just right.?

However, India?s auto industry association has predicted flat overall growth in car sales by the financial year end in March, thanks to rising interest rates and booming car prices.

Undeterred, luxury automakers are still flocking to India to open new car showrooms.

Recently, Lamborghini introduced its Aventador LP 700-4, priced at 36.9 million rupees. Despite a waiting period of 18 months, the company has received more than 20 orders and hundreds of queries. Until now, Honda and Toyota were considered as the most luxury brands in India. Not anymore, as there has been a flood of luxury cars from makers like BMW, Porsche, Audi and Mercedes.

?There is a distinctive shift happening. People are jumping from segments like Honda Civic to Mercedes Benz E-Class which is an example of growing luxury car sales,??according to Mohan Mariwala, the auto executive explained.

Haresh Punjabi, a Delhi resident, who owns a Mercedes ML 350 sport utility, BMW 740 Li, and a Porsche 911 Carrera revealed: ?If five years ago you bought a BMW or Mercedes people will still look at you. And today if you own any of these then it?s not a big head turner.?

In March 2011, BMW has won India?s luxury car race by selling 7,079 vehicle compared to 6,670 of Mercedes. However, in luxury car segment India still lags behind China where both Mercedes and BMW sold about 320,000 cars in first nine months.

One such reason is the heavy taxes levied on imported luxury goods by Indian government as compared to other countries. Also the poor condition of roads in major cities is considered as the single reason that deters sales of luxury car manufacturers.

According to the global research firms McKinsey & Co, India has around 2 million households with an annual income of more than $36,000, and the number is set to increase by 8-10 million by 2015, if the country?s economy stays on track.

Another report compiled by AT Kearney reveals luxury car spending has increased from 36 percent in 2009-10 to $1 billion in 2010-11.


As luxury cars are trying hard to rule over Indian roads, SUV cars segment is also gearing up for the race. Recently, Ford unveiled its EcoSport SUV in India with 1.0 litre gasoline, as the company is set to reach its goal of bigger market presence in India, Brazil and Southeast Asia.

Ford says it will be investing $142 million to build its EcoSport model plant in Chennai, India. Michael Boneham, President and MD of Ford India Pvt Ltd, said: ?The new product will be the second Ford global vehicle to be launched in India and part of eight that we plan to launch by the middle of this decade.?

A new year has begun prompting a new competition between foreign makers of SUV and luxury cars vying to dominate the market while buyers are lining up their pockets to buy the latest luxury car model before another friend or neighbour bags it.

Source: The Times of India, Reuters, WSJ

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