India witnesses a surge in high-end automobile purchases, breaking previous records for luxury cars sale in 2023.
Record-Breaking Daily Sales
In a remarkable turn of events, luxury car sales in India experienced an unprecedented spike, reaching record-breaking levels in 2023. Daily sales of cars priced over INR 50 lakh surged to 128, surpassing the pre-COVID figure of 95. This surge is attributed to post-COVID lifestyle changes, robust corporate earnings, and a growing interest among younger professionals.
A Surge in Average Daily Sales
Carmakers in India reported an average daily sale of 128 cars priced over INR 50 lakhs in the previous year. Further, marking a significant increase from the pre-COVID 2019 figure of 95 per day. This surge has propelled total luxury car sales to an all-time high for the calendar year.
Factors Driving the Trend
The notable rise in sales is credited to a shift in lifestyle choices post-COVID-19, leading many younger professionals to opt for high-end automobiles. Additionally, robust corporate earnings have played a pivotal role in driving this trend. Industry experts anticipate this momentum to persist, citing increasing income levels and the relatively low penetration of luxury cars in the country.
Impressive Industry Growth
According to industry estimates, a staggering 46,000-47,000 luxury vehicles were sold in India in 2023. Further, marking a remarkable 21% increase from the previous year’s 38,000 units and a 35% surge from 2019.
Leading Players’ Performance
While leading players like Mercedes-Benz and BMW are yet to disclose their India sales for 2023. Audi has already announced an impressive 89% increase in sales. Moreover, with 7,931 units sold in 2023 compared to 4,187 in the previous calendar year, outpacing the overall industry growth rate.
Shifting Demographics and Consumer Behavior
Head of Audi India, Balbir Singh Dhillon, highlighted a significant shift in consumer demographics. Especially, with a substantial increase in demand from salaried professionals, doctors, lawyers, and chartered accountants. This surge is attributed to a growing “You Only Live Once” (YOLO) mindset among buyers.
Low Penetration of Luxury Cars
Noteworthy is the low penetration of luxury cars in the Indian market. Further, accounting for just over 1% of the automobile market share. Industry experts point to the immense potential for luxury carmakers in India. Moreover, considering it is one of the fastest-growing major economies globally, with a high number of billionaires.
Transition to Electric Vehicles
The luxury car segment expects support in sales through the transition of electric vehicles. The government’s favorable GST rate of 15% on electric vehicles, compared to 48-50% on petrol and diesel vehicles, and potential local assembly of electric vehicles. Basically, seen as key drivers for the anticipated surge in electric luxury car sales.
Challenges and Opportunities
Audi’s Dhillon revealed that the company is exploring the viability of local assembly for electric vehicles in India. Further, expecting nearly half of luxury car sales in the country to come from electric vehicles in the next five years. However, challenges such as high custom duties, GST, and road taxes on imported internal combustion engine vehicles continue to impact the prices of luxury cars. Especially, hindering their sales in the country.
Robust Growth in Affordable Segments
Despite these challenges, sales of cars, sedans, and utility vehicles. At the more affordable end of the market grew by 8% to 4.1 million units during the year. Moreover, indicating a robust overall growth in the automobile sector in India.