Porsches, Lamborghinis and Mercedes are roaring through the streets of Delhi and Mumbai as demand for luxury cars rises in India, a sign of the country’s economy accelerating out of the worst of its pandemic downturn.
India’s auto industry has struggled for several years as higher costs, production cuts and the current global semiconductor shortage depressed sales. But executives said purchases of premium and supercars, while comparatively small by international standards, were approaching their highest-ever domestic levels.
“On the luxury segment, we really are bullish right now,” said Gurpratap Boparai, managing director of Skoda Auto Volkswagen India, which also owns the local franchises of Porsche, Lamborghini and Audi. “That’s the strata of society that has come out of Covid quicker than the rest.”
The turnround is a sign of how India’s economy is recovering as Covid-19 case numbers fall and rising vaccinations prompt a swift reopening. But it also points to the uneven pace of the recovery, as India’s very rich — among them business owners and those invested in the buoyant equities market — have bounced back the fastest from the devastation of the pandemic.
“Most of our owners, and specifically high-end [vehicle owners], run successful companies,” said Martin Schwenk, managing director of Mercedes-Benz India. “They had very good earnings and profitability . . . and that created a lot of confidence.”
Sales of top-end luxury cars costing Rs20m ($267,000) or more were approaching all-time highs, executives said. They expect to sell about 280 cars in this category this year despite coronavirus-induced sales disruptions, compared with the record of 325 in 2018.
Mercedes-Benz, many of whose vehicles start at about Rs4m, said it sold 4,101 vehicles in India in the quarter ended September — double its tally for the same period last year.
“Unlike last year, there was no real hesitation” to start buying cars, Schwenk said, after lockdowns in April and May were lifted.
The auto industry went into a deep contraction in 2019 as India’s economy slowed and changes to safety and fuel standards increased costs.
More recently, a global chip shortage has hampered the supply of new vehicles. While industry-wide numbers for September have not been released, India’s largest carmaker Maruti Suzuki has reported a dramatic drop for the month, selling just 63,000 passenger vehicles domestically, down from 148,000 last year.
Many foreign automakers have floundered in India. Ford said last month it would stop manufacturing cars in India and shut down its local plants.
But luxury auto brands were more sanguine. Mercedes has launched several new models in the country this year, including the Maybach GLS SUV, which is priced at more than Rs24m. McLaren also launched in the country this year.
Boparai said he expected that sales of his company’s lower-end models, such as Skoda and Volkswagen, would take longer to recover.
But high-end auto buyers were less price-sensitive, industry figures said. Imported luxury cars already attract duties of 100 per cent, putting them out of reach to all but the very richest in India.
Boparai said the growth of the market pointed to the rise of a more self-confident Indian business elite that was more willing to indulge in luxury brands.
“The younger generation is less hesitant to spend. India was following the socialist model of development [before]. Conspicuous consumption was looked down upon,” he said. “We’ve largely moved away from this mindset.”