Germany’s Mercedes-Benz is targeting the current young new millionaires, in the luxury car segment in India. The market is said to be creating faster sales growth according to the luxury automaker. These young millionaires include entrepreneurs or high-earning professionals who are into luxury or technology of cars.
“The base is getting broader and gradually moving beyond our traditional customers,” Schwenk told Reuters in a recent interview in the western industrial city of Pune, home to Mercedes’ India headquarters and manufacturing plant. “Going forward we will see higher growth rates in the luxury segment than we see in the mass market,” he said, adding that buyers’ average age had also fallen below 40, from more than 45 earlier.
Mercedes is the top-selling luxury car brand in India, with a market share of more than 40%, says auto market data provider JATO Dynamics, and it competes with Audi, BMW, and Tata Motors Jaguar Land Rover. Global carmakers’ biggest growth hurdle is a shortage 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 cars and wait times of more than six months in some cases, Schwenk said.
Luxury brands in India
“We have very good sales momentum, the concerns are on the supply side. You have congestion at the ports that cause really significant delays and that is hampering our output,” he said. India’s start-up frenzy and stock market boom are creating a new breed of wealthy splurges on luxury brands such as Rolex, Louis Vuitton, and Gucci, the 2021 Hurun India Wealth Report showed.
The number of Indian households with a net worth of at least a million dollars grew 11% in 2021 to 458,000 and is expected to increase by 30% over the next five years, the report said. India is largely a small and low-cost car market in which luxury models account for just over 1% of total annual sales of about 3 million.
Mercedes’ India sales rose more than 40% to 11,242 cars in 2021, coming off a low of 7,893 during the pandemic-hit year of 2020. But the carmaker saw growth of 80% in top-end models such as the GLS, S-Class, and GLS Maybach, all cars costing more than 10 million rupees ($131,337). Schwenk said while the pandemic had driven some of this demand, as more people “spent for their own pleasure”, India’s luxury car market showed potential for higher growth, a feature missing over the last six to eight years.