Younger clientele is driving luxury car sales in India

From Lamborghini to Mercedes Benz and BMW, all luxury carmakers are seeing strong demand for their premium models despite the COVID-related disruptions, largely due to a shift in customer profiles towards younger, first-generation entrepreneurs who believe in the “You’re just living once” philosophy.

Varun Kalyanasundaram, a 33-year-old director at Polimer Media in Chennai, bought his first luxury car almost 10 years ago “for the pure driving pleasure, the technology and above all the comfort”.

Mr. Kalyanasundaram currently owns a BMW X7, Mercedes Benz S Class, Mercedes Benz GLS, Audi E-tron and is now eyeing the Mercedes Benz Maybach GLS. “I’m driving alone. I don’t have a driver. I like long car journeys and driving pleasure is the priority. The technology should be there, but I need comfort. That’s it,” he says.

Sharad Agarwal, Head, Lamborghini India says the customer profile has changed over the years. “We see younger, first-generation entrepreneurs choosing Lamborghini. From founders of successful start-ups to an increasing proportion of female buyers, the pool of demand for Lamborghini has grown immensely in recent years.”

2021 was a record year for Lamborghini, with prices starting at £3.16m (showroom-ex) and going up to £10m or more, depending on the level of customization chosen by customers. The company had delivered 69 cars in India this year.

Mercedes Benz, which generated nearly 29% of its sales from the $1 billion-plus segment, up from 12% in 2018, says several factors are contributing to the change. On the one hand, the company has consciously opted for fully equipped products and “does not offer any entry-level models because the customer really wants the best in their price range for a luxury product and that alone creates a clear claim in terms of pricing,” said Martin Schwenk, MD & CEO, Mercedes-Benz India.

Mr. Schwenk also notes that “the purchasing power is there and customers are willing to spend more than maybe a year ago.” the C-Class is 35 years old, which means that many customers are also very young and these customers behave differently. You live much more consciously in the now. So we’re seeing a general trend, perhaps helped by COVID, that people want to spend money on themselves,” he adds.

Naveen Soni, President of Lexus India, shares similar views and says the customer mindset has changed. “I would say the YOLO effect – you only live once – was very pronounced in the market. People started to see luxury as not just a luxury and as such they wanted to spend money on their lifestyle. ‘You only live once’ means that whatever you have to do, you have to do within that lifetime and you want to enjoy the fruits of the hard work you put in.”

Mr Soni adds that the pandemic has caused many people to become more aware of the “fragile nature of life” and want to “live it out”.

Demand for high-end vehicles has also risen sharply for BMW Group India. Company President Vikram Pawah says that within the luxury circle there are those who want to further differentiate themselves by owning only the best in their class. In addition, the customer base for luxury cars has developed enormously in the last decade. “Alongside traditionally wealthy families, a new group of high achievers has emerged who have a global perspective, are well-travelled and have an eye for luxury products. While Generation X has adapted to become tech-savvy, for Millennials and Generation Z, technology and artificial intelligence are an indispensable part of everyday life. So naturally we see a growing trend towards cars with strong human-machine interaction that make mobility comfortable and luxurious,” adds Mr. Pawah.

In fact, growth for this segment has remained stable even during the pandemic, he notes.

Balbir Singh Dhillon, Head of Audi India, says the company is seeing growth and expects it to continue in the coming months. “We have a good order situation for our top cars, 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 is at the top of our product portfolio,” he said, adding that purchases in the high-end segment are primarily driven by sentiment.

“While sales have been stable and even up for the past few quarters, we’ll have to see if this sentiment holds up when things fully normalize. We strongly believe that this is an opportune moment for the government to use this positive sentiment as a stepping stone to implement reforms such as the rationalization of tariffs/GST/Ccess/Car tax structure for luxury cars, which in turn will benefit the segment to grow and realize its full potential,” says Mr. Dhillion.

According to Ashim Sharma, senior partner and group leader at Nomura Research Institute, this trend is mainly due to the fact that the customer segments buying these vehicles are those that run large companies and have had good revenues. The stock market also reflected this until recently. “Additionally, the introduction of higher priced performance variants by luxury car manufacturers is being embraced by the younger generation in those households driven by a desire to own something exclusive and/or driven by superior driving dynamics/acceleration.”

Increased demand from outside the subways has also contributed to strong demand for luxury cars. Lamborghini’s Mr Agarwal adds that while New Delhi, Mumbai and Bengaluru are still its larger markets, the company is seeing a significant increase in demand from non-metropolitan cities, with nearly 25% of sales now from non-metropolitan cities come. “Today you can find a 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 Dhillion adds that while the brand continues to see good demand from cities such as Mumbai, Delhi, Bengaluru and Hyderabad, markets such as Ahmedabad, Guwahati and Kolkata have also seen good demand.