Almost every sector is eying India as a potential investing hub, and automobile sector is no exception. Besides being still a developing country, it shouldn’t be a surprising fact that Indian ranks world number 3 in terms of the number of millionaires. This era of development in India has been at its best, despite recession, strong fundamentals of Indian economy have managed to post a decent GDP growth last year.
Increase in disposable income of the people has led to a different lifestyle. Now, the mindset of Indian consumer is a lot different. Previously, Indian consumers used to check the prices of everything they bought. Now, the consumer looks at the experience of the company during the buying process. More than price, Quality matters. This paradigm shift has also changed the way companies look at India. Slowly and steadily the luxury car market which was in a very nascent condition in India, is now counting on big revenues from the country’s customers.
Of late, there had been a steep increase in the luxury car market. Year 2009 recorded a whopping 25% growth in the luxury car market. It would be news for many of us that India ranks number 1 in exporting automobile components. The German machines which have fame all over the world use components which are imported from India.
New entrants like Volkswagen are going to heat up the competition even more. Currently the fight is in between BMW and Merc. Despite being a late entrant in the Market, BMW has been successful in capturing a considerable amount of market share. But, this fight between just two companies is not going to stay for long as new players are entering the Indian market.
Is India a dream place for companies? There are clear indications from the current market scenario that luxury car market in India is bound to grow. Last year Rolls Royce’s Phantom, a sublime luxury masterpiece was priced around 4 crores and 35 cars were sold. In the late December 2009, Rolls Royce launched its new model GHOST which is expected to be even highly priced and will receive more orders.
This increased demand for luxury cars, is not something that spurt all of a sudden. The gradual development of the Indian economy and the increased disposable income has influenced people to make a status symbol with respect to their cars. Luxury sedans are available from the price range of Rs. 20 lakhs, which are mostly preferred by the first time buyers in this segment. The achievers, who adapt to the latest happening and like to be dominant, are always quick in buying the heavy priced sedans.
One of the major reasons for the increasing number of Luxury car’s buyers is because of the multinational companies who pay very lucrative pay packages to its employees. These highly lucrative earning enabled these youngsters to buy luxury cars. This has further given a boost to the industry.
Besides the consumer behaviour, the Government also played a prominent role in this. The government formulated polices pertaining to imports of the country and equity regulations has helped the luxury car making companies to operate in India in a better way. The reduction in import tariffs in the automobile industry has helped these companies price their cars at a lower price as compared to what they used to be.
Luxury car market in India has grown tremendously over the last few years. To maintain this growth in India, the Indian automobile industry and the Government of India has to make some serious efforts.
The writer is a correspondent of Youth Ki Awaaz and also a student of MBA from IIFT.
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