Younger customers drive luxury car sales in India

Strong demand backed by shift in customer profile, COVID-related disruptions not weaken

Strong demand backed by shift in customer profile, COVID-related disruptions not weaken

From Lamborghini to Mercedes-Benz and BMW, all luxury car makers are seeing strong demand for their premium-class models, despite the turmoil associated with COVID, largely due to a shift in customer profile to younger, first-generation entrepreneurs, Who believe in the philosophy “You only live once”.

Varun Kalyanasundram, a 33-year-old director at Chennai-based Polimer Media, bought his first luxury car nearly 10 years ago “because of sheer driving pleasure, technology and most importantly comfort”.

Mr. Kalyanasundram currently owns a BMW X7, Mercedes Benz S class, Mercedes Benz GLS and Audi E-tron and is now looking forward to a Mercedes-Benz Maybach GLS. “I drive alone. I don’t have a driver. I like long drives and driving pleasure is the most important. Technology has to be included, but I need comfort. That’s it.”

Sharad Agarwal, President of Lamborghini India, said there has been a shift in customer profile over the years. “We see younger, first-generation entrepreneurs choosing a Lamborghini. From founders of successful startups to a growing percentage of women buyers, demand for Lamborghini has grown exponentially over the past few years.”

2021 was a record year for Lamborghini, with prices starting at Rs 3.16 crore (former showroom) and going up to Rs 10 crore or more depending on the level of customization customers choose. The company had delivered 69 cars in India that year.

Mercedes-Benz, which saw nearly 29% of sales coming from over Rs 1 crore now versus 12% in 2018, says several factors have contributed to the change. First, the company made a conscious decision to offer fully-equipped products and “do not offer entry forms because when a customer wants a luxury product, they really want the best in their price segment and that in and of itself creates a clear ambition as well,” said Martin Schwenk, Managing Director and CEO of Mercedes- Benz India.

Mr. Schwenk also notes that “the purchasing power is there and customers are willing to spend money probably more than a year ago.” “For Class S, the average age of a customer has fallen to 38, and for Class C it is 35, which means that a lot of customers are also very young and these customers have a different behavior. They are much more conscious of living in the present. So , we see a general trend, perhaps helped by COVID, where people are willing to spend on themselves.”

Echoing similar views, Naveen Soni, president of Lexus India, says there is a change in customer mindset. “I would say that the effect of YOLO – you only live once – was very evident in the market. People started to look at luxury as not just a luxury, and so they wanted to spend on their lifestyle. “You only live once” means that all What you have to do you have to do during that lifetime and you want to enjoy the benefits of the hard work that you do.”

Mr Soni adds that the pandemic has led many people to become more aware of the “fragile nature of life”, and a desire to “live it”.

For BMW Group in India too, demand for high-end cars has been strong. Company president Vikram Bawa says that within the luxury sphere, there are those who want to be further distinguished by having only the best in class. In addition, the customer base for luxury cars has developed significantly in the past decade. “Apart from traditionally affluent families, a new group of achievers has emerged who are world-viewing, well-travelled, and care about luxury products. As Generation X has adapted to become a tech savvy, technology and artificial intelligence for Millennials and Generation Z are an indispensable part of everyday life.” And it is only natural to see a growing trend towards cars that have a strong interaction between humans and technology making commuting comfortable and luxurious,” adds Mr. Bawah.

In fact, the growth of this segment has remained resilient even during the pandemic, he points out.

Balbir Singh Dhillon, President of Audi India, says the company is seeing growth and expects it to continue in the coming months. “We have a good demand bank for our high-end vehicles, including the Audi e-tron, Audi Q8 and our RS performance models. We are also preparing to launch our flagship sedan, the Audi A8 L which sits at the top of our product range,” he added, adding that for the top Of its category, purchases are primarily driven by sentiment.

“While sales have been stable and even grown in the past few quarters, we have to see if this sentiment will continue when things fully return to normal. We strongly feel this is an opportune moment for the government to use this positive sentiment as a launching pad to bring about reforms such as tariff/GST rationalization / Road tax structure on luxury cars, which in turn will help the sector to grow and see its full potential,” says Mr. Dillion.

Ashim Sharma, Senior Partner and Group Head of Nomura Research Institute, says this trend is mainly due to the fact that it is the segments of customers who buy these compounds who are running big businesses and making good profits. The stock market also reflected the same until very recently. “In addition, the release of performance variants by manufacturers of higher-priced luxury cars is being chosen by the younger generation in these homes driven by the desire to own something exclusive and/or driven by superior driving dynamics/acceleration.”

The increased demand from outside the metro has also helped drive the demand for luxury cars. Mr. Agarwal of Lamborghini adds that while New Delhi, Mumbai and Bengaluru remain its largest markets, the company is seeing a definite increase in demand from non-metro cities, with nearly 25% of sales now from non-metro cities. “Today you can find Lamborghini in Jodhpur, Indore, Ludhiana, Kanpur, Lucknow, Kochi, Kozhikode, Salem, Udupi, Madurai and many more. This year, we have already delivered the first Lamborghini in the Northeast, in Shillong, and the first Lamborghini in Daman. ,” he says.

Mr. Dillion adds that while the brand continues to see good demand from cities including Mumbai, Delhi, Bengaluru and Hyderabad, markets like Ahmedabad, Guwahati and Kolkata have also seen good demand.

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