Luxury car sales in India are expected to gain momentum in 2017 with even greater pace compared to 2016. Thanks to demonetisation drive in November and ban on diesel vehicles in Delhi-NCR, the luxury car market in India has not moved much in the last three years despite numerous launches and sales promotion initiatives.
Industry experts, however, noted that the overall domestic premium car market has stagnated at around 35,000 units a year for the last three years, with players eating into each other's share.
According to IHS Markit, a sales forecasting and market research firm, sales of luxury cars contracted 4.24 per cent in 2016 at 33,279 units from a year ago period.
As per data available major players in the segment such as Audi and BMW witnessed a fall in sales last year. Audi India, once the market leader, sold around 7,800 units in 2016, 30 per cent lower than the 11,192 units sold a year earlier. Mercedes, the market leader in the segment sold 13,231 units in 2016, down 1.8 per cent from 2015.
With economy back on track post demonetisation and a positive sentiment seen in the first quarter of the new calendar year, market for luxury cars is expected grow at a healthy pace in 2017.
The firm estimates that the market will expand by more than 10 per cent in 2017, the fastest in three years, and 42 per cent and 21 per cent in 2018 and 2019, respectively.
“We expect the luxury car market to showcase a better performance this year. We had a high sales target in the first quarter (January-March) and achieved more than what we expected," said Rahil Ansari, head, Audi India.
Audi’s rival Mercedes also said that the first quarter of the FY2017 were its best ever. Mercedes sold 3,650 units in the period, an increase of 1 per cent from the same period a year earlier.
Ronald Folger, Managing Director & CEO, Mercedes-Benz India said, “2017 began with a positive drive and we are confident of bettering our sales performance in the coming months. We are glad to witness growth re-emerging in Q1 2017, which makes us confident of our customer centric strategy.
Tom von Bonsdorff, MD and CEO at the local arm of Swedish luxury car maker Volvo Auto, said that last year was very stagnant for the industry so he is expecting this year would be a good one.
“We achieved double digit growth in first quarter and we expect it do for the rest of the year. For us we think that the S90, XC90 and new models will drive growth. We aim to have 10 per cent share in luxury market by 2020 from 5 per cent now. I am quite hopeful we will achieve it,” Bonsdorff said.
Audi Eyeing Number 1 Spot
Audi, which became the first company to sell 10,000 units in a single calendar year is looking to regain its number one spot in the Indian luxury car market.
Ansari said: “We want to create a sustainable growth in India and we want to be at the top spot as we belong there. Clearly we do not have to do it overnight but in a sustainable manner - when we reach the top, we will stay there.”
The German carmaker has aggressive plans to reach the number one position. Audi is launching 10 cars this calendar year and is working to improve its reach via mobile terminals.
“We are not only looking at volumes but at fulfilling customers' requirements and create delight moments for them. We will launch a new model, which will create a new segment in the industry," Ansari said.
He added that a mobile customer touch-point is an interesting way to communicate with the customers in the tier-2 and tier-3 markets. This year Audi Mobile Terminal will visit more than 40 cities.
BW Reporters
The author is Senior Correspondent with BW Businessworld
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