A Mercedes-Benz emblem is seen on S500 automobile on the firm’s automobile meeting plant in Chakan, exterior Pune, India, June 11, 2015. . REUTERS/Danish Siddiqui/File Picture
PUNE, India, April 12 (Reuters) – Germany’s Mercedes-Benz (MBGn.DE) is betting that an increasing pool of younger new millionaires will drive demand for luxurious vehicles in India, creating sooner gross sales progress than for mass market vehicles, a prime firm official mentioned.
India’s growing numbers of “greenback millionaires” embody younger entrepreneurs or high-earning professionals who admire the luxurious factor and expertise of the vehicles, mentioned Martin Schwenk, chief govt of Mercedes-Benz India.
“The bottom is getting broader and steadily transferring past our conventional clients,” Schwenk instructed Reuters in a current interview within the western industrial metropolis of Pune, dwelling to Mercedes’ India headquarters and manufacturing plant.
“Going ahead we are going to see greater progress charges within the luxurious section than we see within the mass market,” he mentioned, including that patrons’ common age had additionally fallen under 40, from greater than 45 earlier.
Mercedes is the top-selling luxurious automobile model in India, with a market share of greater than 40%, says auto market knowledge supplier JATO Dynamics, and it competes with Audi, BMW (BMWG.DE) and Tata Motors’ (TAMO.NS) Jaguar Land Rover.
World carmakers’ largest progress hurdle is a scarcity of semiconductors and logistics woes worsened by Russia’s invasion of Ukraine. For Mercedes India, this has led to an order backlog of 4,000 vehicles and wait occasions of greater than six months in some circumstances, Schwenk mentioned.
“Now we have excellent gross sales momentum, the issues are on the provision facet. You have got congestion on the ports that trigger actually vital delays and that’s hampering our output,” he mentioned.
India’s start-up frenzy and inventory market growth are creating a brand new breed of rich splurgers on luxurious manufacturers reminiscent of Rolex, Louis Vuitton and Gucci, the 2021 Hurun India Wealth Report confirmed.
The variety of Indian households with a internet price of a minimum of one million {dollars} grew 11% in 2021 to 458,000 and is anticipated to extend by 30% over the following 5 years, the report mentioned.
India is basically a small and low-cost automobile market during which luxurious fashions account for simply over 1% of complete annual gross sales of about 3 million.
Mercedes’ India gross sales rose greater than 40% to 11,242 vehicles in 2021, coming off a low of seven,893 in the course of the pandemic-hit yr of 2020.
However the carmaker noticed progress of 80% in top-end fashions such because the GLS, S-Class and GLS Maybach, all vehicles costing greater than 10 million rupees ($131,337).
Schwenk mentioned whereas the pandemic had pushed a few of this demand, as extra individuals “spent for their very own pleasure”, India’s luxurious automobile market confirmed potential for greater progress, a function lacking during the last six to eight years.
To capitalise on the momentum, the corporate plans to launch 10 fashions in 2022, together with its domestically assembled electrical sedan EQS. learn extra
Whereas progress in India’s luxurious and mass markets usually are not straight comparable, Mercedes’ high-end fashions doing effectively displays the wealth of the nation, mentioned Ravi Bhatia, president for India at JATO.
“The wealthy have develop into richer and a few of them have ended up upgrading their life-style,” Bhatia mentioned.
JATO’s evaluation additionally confirmed that Mercedes’ product combine and pricing led to a decrease common weighted value of its vehicles, placing upgrades to the luxurious section inside attain of extra clients, he added.
Mercedes’ gross sales in India in 2021, nonetheless, have been nonetheless decrease than its peak of greater than 15,500 vehicles in 2018. Schwenk mentioned gross sales may method 2018 ranges this yr if there have been no additional provide chain disruptions due to COVID or geopolitical points.
Reducing Indian taxes on luxurious vehicles, which he mentioned have been among the many highest on the earth, would additionally assist develop the section and profit the automobile market.
Reporting by Aditi Shah; Enhancing by Clarence Fernandez and Susan Fenton
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