Why the luxury car market is zipping in India

(Clockswise from left) JLR, BMW, Mercedes-Benz and Audi are leading the Indian luxury car market.
 
You’ll know the Land Rover Defender best as that big boxy SUV in James Bond movies that’s pulling implausible moves as it chases down the protagonist. It’s hard not to be enamoured with cars like this, and Indian buyers seem to be no exception.  
 
JLR India has sold over a thousand of these, which start upwards of Rs 1 crore. Combined with the even more high-end Range Rover models, sales have grown by 72 percent in 2023.  
 
JLR isn’t a one-off—this appetite for luxury extends throughout the luxury car market.
 

JLR’s German rivals, who have a bigger presence in India, have taken larger strides still in this rarefied end of the Indian car market. Over 25 percent of Mercedes-Benz India’s sales in 2023 have come from S-Class, EQS, Mercedes-Maybach and AMG models. This is a 22 percent increase over last year. BMW India, which follows Mercedes as the second-largest luxury car brand here, also stated that it’s sold over a thousand of its most pricey ‘luxury class’ models, registering a growth of 102 percent. Audi India, starting from a low base, also saw sales jump by 88 percent in this period again buoyed by its top offerings.
 
This appetite among India’s elite also filters down to the rest of the Rs 50 lakh-plus luxury segment. Mercedes-Benz, BMW, JLR also posted their best-ever sales in 2023. Mercedes grew by 11 percent to sell 12,768 units, despite still facing supply constraints for its core GLA, GLC and GLS models. BMW India too grew by 10 percent, its BMW and Mini brands accounting for 9,580 units sold. For some context, the overall car sales in India grew by 6.8 percent in the last six months.
 
It seems things are only going to get better for these carmakers. Quoting from a statement by Vikram Pawah, president, BMW India, “...our business strategy is playing out well and there are many important factors driving success for us. Most importantly, we are achieving growth across segments in a healthy, balanced and profitable manner. Whether it is the top-end or entry-level, BEV dominance or SAV popularity, our segment-specific strategies and tremendous customer connect are yielding excellent results. We will keep the excitement up with powerful launches from our stable and are dedicatedly focussed on ending 2023 on a high note.”
 
What is fuelling this growth? The biggest shift seems to be in the mindset among prospective owners. India’s steady economic growth has produced wealthy second-generation business owners, a class of start-up professionals as well as high-paid executives. To start with, they happen to be younger. Mercedes-Benz India has stated that the average age of the buyers of its AMG and S-Class lines is now in the mid to late 30s and 40s. They also happen to be more aware and better relate to the identities of these models. 

Also read: We don't want to make an electric car, we want to make a Range Rover electric car: Lennard Hoornik of Jaguar Land Rover
 
Luxury cars also seem to be drawing from the post-pandemic boom among the affluent to be more open to spending on aspirational experiences. The old thought of keeping your money locked away to do its work for you has shifted to a more risk-friendly trend among the elite to create a world-class life around their success.  
 
Another strong driver is the initiatives these manufacturers have taken to cash in on this new crop of buyers. In stark contrast to earlier, established brands are focussed on widening their presence in niches in the luxury car market, bringing in their latest models to India on a quicker timeline than before. A push into luxury EVs and a spurt of launches of performance models are some examples, Mercedes and BMW have taken significant steps to localise the assembly of these models to create more value for consumers.  
 
There’s also a focus now on the ownership experience around these luxury models, something that has been a mild deterrent in the past. There are now thoughtful maintenance packages and lower warranty periods, a 10-year roadside assistance programme by Audi and the 10-year battery warranty on the latest Mercedes EV, the EQE are some examples.  
 
Rohit Krishna, general partner at WEH Ventures, offers some insights on the general boom in the Indian luxury sector, “Overall, post-Covid, most industries have bounced back so there's a lot of positive cash flow flowing around. There's a bit of slowness for salaried employees but businesses are doing well. So that could be the primary driver.”
 
A Credit Suisse report suggests that the number of millionaires in India will grow by 105 percent by 2026 while Bain and Company expects India’s luxury market to grow to 3.5 times its current size to $200 billion by 2030. With luxury cars expected to be a big chunk of this, India’s luxury carmakers have reason to be confident.