Demand for luxury cars outpaces overall auto sales

Automakers see a lot of room for growth for the segment

Wealthy Indians, who made money on the stock market or through their investments in tech, did not have a chance to spend it on overseas vacations or other indulgences in the pandemic. Instead, they chose to splurge on luxury cars from Audi to Lamborghini.

The result: While India’s automobile leaders such as Maruti and Hyundai returned below-par retail sales in the year ended March 2022, luxury car sales boomed in the world’s fourth-largest vehicle market.

As many as 24,009 luxury cars sold in India in the 12 months which ended on March 31, up 45 per cent from the year-ago period, according to data from the Federation of Automobile Dealers Associations. Meanwhile, retail sales of the overall auto industry rose by 14.24 per cent.

The trend boosted the fortunes of luxury carmakers across the board including Audi, Lamborghini, Mercedes, BMW, Jaguar, Volvo, Porsche, Rolls Royce, Bentley and Ferrari.

“We have seen a shift towards premium vehicles in most of the geographies, including India,” said Manoj Garg, Director-Investment, WhiteOak Capital Group.

Taking India’s example, he added, the share of the SUV segment in the overall vehicle sales mix has gone up over the years, rising from 7 per cent in FY13 to 29 per cent in FY21.

Some of these car makers such as Audi clocked a 169 per cent year-on-year growth with 1,088 cars being sold in FY22 as against 404 in FY21.

Audi India head, Balbir Singh Dhillon, said the luxury car market has shown encouraging signs with the ongoing vaccination drive and decreased number of cases.

“At Audi India, our strong performance last year was buoyed by better preparedness for the second wave, revival in customer sentiment and strong business continuity. In the first quarter of 2022, we have seen strong demand and are hopeful of double-digit growth this year,” he addes.

Italian automobile maker Lamborghini also recorded a 142 per cent year-over-year growth in the year. The company, which is owned by Volkswagen Group through its arm Audi, delivered 63 luxury and Sport Utility Vehicles (SUVs) on Indian roads as against 26 in the entire 2020-21 period.

“The Indian market has huge potential for the Lamborghini brand and we are encouraged by the response we get from our customers and fans of the brand in India,” said Sharad Agarwal, Head of Lamborghini India.

Other carmakers such as Bentley (117 per cent), Mercedes (70 per cent) and Porsche (66 per cent) also saw their retail sales go up considerably during the year.

The road ahead

Globally, the automobile industry has been facing strong supply-side issues in terms of the unavailability of semiconductors and rising input costs. India’s automakers, too, have been failing to match up the demand with their supply.

Agarwal said, “2022 is difficult to predict at the time being due to the current geopolitical situation we are living in.” However, he added that the company continued to stay on track in terms of its goal of consistent growth in India.

The company had also recently announced the selling of 400 cars in India since the inception of operations in India.

Audi’s Dhillon said that no manufacturer has escaped the semiconductor shortage.

“At Audi too, the impact was inevitable – however, our planning cycles are quite long and hence, we have been able to manage well.”

He sees a lot more room for India’s luxury car segment to grow in the days to come.

“It is important to note that the luxury segment has remained only about 1 per cent of the overall passenger vehicle industry and has great potential for growth,” Dhillon said.

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