Vijay C Roy
Tribune News Service
Chakan (Pune), October 2
Cites such as Chandigarh, Ludhiana, Raipur, Nashik and Guwahati are not the ones that come to mind when one thinks of appetite for high-end luxury cars. However, these tier-II and tier-III cities are emerging as markets for swanky cars, especially of their high-end variants. According to industry, out of total sales in these markets, the high-end models are the preferred choice as compared to their entry and mid-level models in metros.
“Although the major volume of sales still comes from metros such as Delhi and Mumbai, but we have witnessed an increased demand for luxury cars in tier-II and tier-III cities,” said Martin Schwenk, managing director and chief executive officer, Mercedes-Benz India (P) Ltd.
The company is witnessing an increased demand for its E-Class and S-Class sedans and GLE and GLS SUVs from small cities. Mercedes’ E-Class sedans are priced from Rs 58.80 lakh onwards, while the S-Class is priced Rs 1.36 crore onwards. “We have seen an increased traction for E-Class and also S Class models. The demand for high-end models, including SUVs, is more in smaller cities as compared to metros,” said Santosh Iyer, vice-president, Sales and Marketing, Mercedes-Benz India.
According to a senior executive working with a BMW dealership, tier-2 cities such as Ludhiana and Chandigarh have grown rapidly and these markets promise remarkable growth prospects.
“Customers in these markets are matured and gradually getting exposed to luxury. If we compare the data, high-end models have a lion’s share in total sales, especially in tier-II and tier-III markets. For example, there is a lot of demand for Audi Q5 and Q7 models in non-metros,” said a senior executive working with Audi. The price of Q5 variant starts from Rs 55 lakh and Q7 is priced between Rs 78 lakh and Rs 86 lakh.
Analysts said the spending capability of customers in these towns has grown manifold.
To tap the demand, the carmakers have strengthened their presence in these cities by opening new dealerships over the past couple of years. Further, the companies are rapidly expanding their sales and service network in these markets. Rollout of new showrooms and finance schemes seem to be paying rich dividends for these luxury carmakers.
In the current situation when luxury car sales have witnessed a negative growth of around 20% in the first six months of the current fiscal, the presence of network in tier-II cities has added cushion to their dwindling sales. According to estimates, around 16,000 luxury cars were sold in the first six months of 2019 as compared to 20,000 units sold a year earlier.
The industry blamed macroeconomic headwinds such as high interest rates, rising import costs and liquidity crunch for the slump in the auto loan market. At 35,000-40,000 units (average) in the past couple of years, the share of luxury cars in India is about 1.17% of the overall passenger vehicle market.
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