At Mercedes-Benz India, vehicles priced upwards of ₹1.5 crore accounted for 25% of total sales so far this year, up from 15% two years earlier, said Santosh Iyer, chief executive of the local unit of the German luxury-vehicle maker. Meanwhile, the share of entry-level luxury cars, priced between ₹45 lakh and ₹60 lakh, declined 10 percentage points to 15%, with mid-range vehicles priced between ₹60 lakh and ₹1.5 crore comprising the remaining 60% of sales at the luxury-market leader.
Consumers across income brackets are upgrading and there is a supply-demand mismatch for premium cars, Iyer told ET. “We had to pause bookings for the Electric G (priced ₹3.5 crore) because we sold out the entire allocation within weeks.”
Mercedes-Benz’s German rivals BMW and Audi are also seeing a similar shift in consumer preferences, said their executives.
While a post-pandemic surge in demand for passenger vehicles in the mainstream market has come down sharply in recent months, the market for luxury vehicles is still posting robust growth. India is among the fastest-growing countries in terms of ultra-rich individuals with a net worth exceeding $30 million, according to a Knight Frank study. These ultra-rich people, many of them young strartup founders, are ready to splurge on luxury lifestyle including top-end automobiles. Sales of luxury vehicles are forecast to top the 50,000-unit mark for the first time in 2024 compared with around 47,000 units in 2023.
Iyer said the market trend underlines the growing maturity of the Indian luxury customer, especially young customers. “We have increasingly noticed young customers below 40 years now upgrading to the TEV (top-end-vehicle) segment from ‘Entry’ and ‘Core’ (midrange) segments, as aspiration and disposable income are on the rise,” he said.
He also cited strong corporate earnings and stock market performance for the trend.
Vikram Pawah, president of BMW Group India, said consumer confidence in the luxury segment is on the rise, attributing it to the sturdy fundamentals of the Indian economy.
Audi India head Balbir Singh Dhillon said despite facing supply constraints in the first half of the year, the company has seen a strong uptick in demand for luxury vehicles, especially for high-end SUVs. The company cited better roads, easy availability of credit and a change in consumer mindset after Covid for the trend, saying that customers are now ready to spend more on purchase of bigger and better vehicles.
“We are seeing strong customer sentiment, especially for our luxury SUV range,” Dhillon said. He expects this momentum to strengthen as the industry moves further into the festive period.”
Long waiting periods
In the top-end segment, Mercedes-Benz has orders worth ₹1,000 crore for four of its cars – S-Class, G63 AMG, Maybach EQS SUV and the Electric G – within weeks of opening bookings in the run up to the festive season. Waiting period of the G63 AMG, priced ₹2.25-3.30 crore before local levies, runs into a year.
It has orders for 150 units of the G63 AMG, 50 units of Maybach EQS SUV (₹2.25 crore, ex-showroom), 60 units of the S-Class (₹1.77-1.86 crore, ex-showroom) and 80 units of Electric G. Overall, it has orders for 1,800 cars.
The rapid increase in demand for top-end models boosted the average selling price of Mercedes-Benz vehicles to ₹88 lakh this year, from ₹57 lakh four years back.