The rapidly growing luxury car segment (at a price range upwards of Rs 25 lakh) in India has seen young affluent customers buying vehicles on the back of a rise in disposable incomes, changing lifestyles and a shift in decision-making from elders to youngsters.
Though the business community accounts for most sales of luxury cars, the segment has been seeing an increasing number of young professionals from the IT, legal, medical and finance segments with a growing appetite for luxury cars.
"Today, the business community is not as dominant as it used to be five years ago when it comes to the purchase of luxury cars," says Sanjiv Sahajwala, head - marketing, DaimlerChrysler India.
"We have also been witnessing a shift in the average age of our customers. The average age used to be upward of 45 years about 10 years ago. Now, the average age is about 37. The shift in decision-making from elders to youngsters is also a major driving factor," he added.
K S M Musaddique, managing director, Trans Car India, the authorised dealer for Mercedes-Benz in Tamil Nadu, says that 2007 witnessed a new variety of customers from IT, real estate as well as doctors and architects buying luxury cars.
"Earlier, IT professionals used to account for about 10 per cent of our sales. Last year, they accounted for over 20 per cent," he added.
However, the segment is yet to see more buyers coming from the 'services sector', considering its growth and potential.
"This sector offers good potential and we expect to see this segment drive growth in the coming years," Sahajwala said.
The Indian luxury car market is currently dominated by Germany luxury carmakers such as DaimlerChrysler and BMW, while the market has also attracted global luxury car markers such as Audi, Volkswagen, Porsche, and Lamborghini.
Sales of luxury cars in India were estimated at about 4,500 units in 2007. Of this, DaimlerChrysler sold about 2,500 cars, followed by BMW with about 1,400, while the rest were accounted for by Audi and others.
DaimlerChrysler, which has just launched its new 'C-Class' expects to sell about 3,000 units in 2008. BMW has ramped up annual capacity to 3,000 units from 1,700 cars at its assembly plant near Chennai.
With sales of about 170 cars in 2007, Trans Car India accounted for about eight per cent of all-India sales of Mercedes. It expects to sell about 225 cars in 2008.
"Families with the capacity to pay monthly EMIs of Rs 30,000 are also showing interest in buying luxury cars. We are also targeting new age entrepreneurs and SMEs segments," Musaddique said.
The luxury segment is expected grow faster than the passenger car market, which has been growing by about 15 per cent CAGR over the last five years, with growth concentrated in the small car segment.
"Tier-II cities such as Ludhiana, Jaipur and Pune also offer huge potential with a good number of cars getting sold," Sahajwala of DaimlerChrysler said.
However, he adds that a paradigm shift in the luxury segment may happen only over the next three years at the present rate of economic growth.
