Sales of luxury cars, bikes zoom

The auto sector is doing well in India, despite stock market meltdown, emerging signals of industrial slowdown and rising costs.

Automobiles

This segment of the automobile market does not see ups and downs, is immune to spiraling fuel costs and a slowdown in economic growth fails to impact it in any significant way.

The luxury car market is doing well in India, notwithstanding the stock market meltdown, the emerging signals of an industrial slowdown and rising input costs. Business Standard spoke to several companies that make high-end cars and dealers who import and sell these cars in the country and they all said in one voice that sales were booming.

"We have witnessed a compound annual growth rate (CAGR) of 55 per cent over the last few years in the sales of super luxury cars that we sell in the country," said Ashish Chordia, CEO of Shreyans, which imports Porsche & Audi cars in the country.

To put it in context, sales of cars in all popular categories have been able to manage a CAGR of 12 per cent for the past three years.

Delhi-based Exclusive Motors, which that imports super luxury cars like the Lamborghini (Gallardo & Murcielago series) and Bentley (Arnage & Continental series) priced Rs 1.5 crore (Rs 15 million) and above, has witnessed an annual growth of 15-20 per cent over the last two financial years.

"We sell to a select clientele comprising mainly the global Indian who has a good understanding of the super luxury cars he is investing in," said Satya Bagla, MD, Exclusive Motors.

Sales of Mercedes Benz in the first four months of this year are already more than half of last year's. It has sold 1,330 units in the period of January-April 2008. Its average monthly sale stood at 208 units last year; it has shot up to 333 this year.

BMW's Indian operations witnessed a 25 per cent growth in sales of its cars & SUVs. The German car major sold 804 units in 2007-8, up from 644 in 2006-07. It has already sold 1,079 units in the first four months of this year, whereas it sold 1,387 units in 2007.

More than half of the sales came from the 5 Series, priced at Rs 37-42 lakh (Rs 3.7-4.2 million). The company is confident of grabbing a significant pie of the 10,000 units a year market by 2010, which currently stands at 5,000 units.

Sales of luxury cars, analysts said, have grown as there is a new generation of entrepreneurs impatient to own marquee brands that connotes status and success. And most of them are young.

Suhas Kadlaskar, director (corporate affairs), Mercedes Benz, India, said that the average age of a Mercedes Benz owner, which used to 45 years earlier, has now come down to 35 years.

"Apart from industrialists, film stars & chairmen of companies, an increasing number of young professionals like doctors, CAs, lawyers and software professionals owning startups don't mind splurging on our cars," he added.

Interestingly, about 15 per cent of the total sales of Mercedes Benz in 2007 came from tier II cities like Kolhapur, Madurai, Nashik, Jaipur and Chandigarh. Moreover, the company sold 100 S Class cars -- its flagship model -- in March alone even as its 2007 average stood at 37 units. The model is priced at about Rs 90 lakh (Rs 9 million).

The prices are steep because of the high import duties. Luxury cars imported as CBUs attract an import duty of 114 per cent and about 50 per cent of sales are financed by banks. But the buyers don't seem to mind. "Luxury doesn't have a recision. Premium car buyers don't typically change their lifestyle based on market fluctuations," said Chordia.

Bikes

Call it a sheer display of money power from the rich and the affluent or simply blame it on the burgeoning segment of upper middle class. Super bikes of international bike makers from Japan and Europe and luxury car lines of German marquee brands are lining up their models as sales numbers continue to shatter records and beliefs that India is not for the luxury brands.

Consider this: Yamaha India, which launched two of its internationally renowned superbikes -- YZF R1 and MT 01 -- in India last December has sold off the total quota of 50 bikes earmarked for the full period of 2008, in a matter of three months. Each of the bikes carries a price tag of Rs 10.50 lakh (Rs 1.05 million), ex-showroom Mumbai.

The company is now scrambling to make special arrangements for more bikes from its sole manufacturing base in Japan.

It will shortly open its first sales outlet in Mumbai which will sell such bikes after it opened similar outlets in places like New Delhi, Ahmedabad, Chennai, Bangalore. Bangalore alone contributed 30 units of overall sales during the period.

Sanjay Triparthi, divisional head, product planning and strategy, Yamaha India, said, "The response for our superbikes in India has been unprecedented.

We had never predicted sales of such magnitude here as this was a segment which was not tapped by any manufacturer. We tested it (the Indian market) and not surprisingly, others are following."

Gauging at the growth of such high-end luxury market, one of Italy's most admired brands, Ducati, announced its foray in India last week. The company will set up outlets in partnership with Precision Motors to sell fully imported bikes in the range of Rs 15-50 lakh (Rs 1.5-5 million).

Other bike makers are believed to have speeded up the process of launching their range of bikes including Honda, Suzuki, Triumph and MV Augusta here. Most bike makers are either studying the market or are finalising their partnership programme with a local player.