Luxury, Super-Luxury Models Enrich India Auto Market

MUMBAI – The entire range and variety of luxury and super-luxury light vehicles of the world now are assembled in or imported into India.

Buyers can choose from among 150 high-end models from five automakers, including the Indian subsidiaries of Audi, BMW and Mercedes-Benz, and 70 super-luxuries from nine manufacturers ranging from Aston Martin to Rolls-Royce.

Prices start from $40,000 and, in the case of the Bugatti Veyron, reach $2.2 million in India, including import duties of 170%.

Some automakers, such as Audi, BMW, Jaguar and Land Rover, offer both luxuries and super-luxuries. In 2013, the 14 companies sold 30,000 luxuries and super-luxuries, including 190 of the latter.

All of them expected to sell about 50,000 luxuries and super-luxuries in 2014, but the recessionary markets might keep them at 30,000 deliveries, including as many as 250 super- luxuries priced at a level where neither inflation nor recession has any impact.

“The segment is still nascent and there is ample scope for a lot more new models,” says Lalit Choudhary, managing director-Performance Cars, which imports Aston Martins.

Rolls-Royce offers its Ghost, Phantom and Wraith models with eight variants in India and is setting up a global R&D center for its key components in Bangalore. Paul Stein, chief scientific officer, says during a recent visit, “In this R&D (facility), we are not looking for a few stray ideas but a comprehensive innovation strategy that could give us an overall competitive advantage.”

Stein says India can strengthen this process, given its growing economy, vast market and talent pool.

In fact, Rolls-Royce has gone a step further. It has referred several issues and research aspects of the business to leading Indian companies and is looking for collaborative solutions. The automaker is taking this approach not because of its low cost, but because it is an innovative way to solve problems.

“We have got an amazing response,” Stein says.

For example, Rolls-Royce could not find a means of removing a sealant either mechanically or chemically. But an Indian company came up a with a simple idea that saved money and did the job without damaging the car. Another Indian company found a way to detect cracks hidden below the paint.

The luxury-market players are reaching out to potential buyers in innovative ways.

Mercedes-Benz India has designated 2014 as a Year of Excellence, and its showrooms across the country are conducting Luxe Fest 2014 events that connect customers or participants with non-automotive luxury brands with which Mercedes is associated. These include business-class tickets on Swiss International Airlines, complimentary stays at Marriott hotels and personalized Bucherer watches.

Mercedes recently sold 120 C-class sedans to Indian rental-car business Carzonrent for $6.7 million after selling two lots of 150 and 120 cars to a group of buyers a few years ago. “This is a strong reaffirmation of our brand’s immaculate equity,” says Ebernard Kern, CEO and managing director-Mercedes-Benz India.

The automaker’s marketing push includes social media and online contacts, which Kern calls “the most powerful and effective means of reaching out to a large number of potential customers.” Mercedes also conducts tours of its 64 sales outlets in 34 cities to familiarize sought-after buyers with the automaker’s AMG high-performance sub-brand.

Other dealers also report online searches for luxury and super-luxury cars have made it easy for automakers to reach vast audiences in distant and smaller places at no cost. “Smaller towns are now a part of the mainstream market,” a Jaguar Land Rover spokesperson says.

Sales are being fueled by younger customers. Pavan Shetty, head of Indian operations for Italian automaker Lamborghini, says, “The age profile of buyers has dropped from 35-50 to 25-35 years.”

A recent study by a consulting firm found there are two classes of buyers: younger people with inherited wealth and professionals who have risen in business and industry. Neither group is concerned with fuel efficiency, which generally goes down as the price of the car goes up.

Most of the super-luxury automakers are looking forward to opening an Indian assembly plant, which would reduce the severe tax burden on the imported cars, making them more affordable and growing the market