After a robust year of sales in 2022, luxury car sales in India are expected to reach a record high of 42,000-45,000 units in 2023, riding on a strong order book, pent-up demand, and new model launches, industry estimates show.
The segment, which accounts for less than 1% of the broader passenger vehicle market in the country, ended last year with sales of an estimated 37,000-38,000 units. The best year for the segment was in 2018 when sales touched 40,863 units.
Strong corporate earnings and steady economic growth are driving demand for luxury vehicles despite global uncertainties, Santosh Iyer, managing director of Mercedes Benz India, told ET.
“The momentum remains strong,” he said. “The industry should grow in double-digits this year. We aim to outperform the market.”
Mercedes-Benz currently has pending orders for 6,000 vehicles in India, with a waiting period of four to nine months.
Most other luxury car companies including BMW India, Audi India and Lexus India – the latest entrant in the space with a relatively smaller footprint – expect 2023 to be their best yet in terms of volumes with sales increasing in high double digits.
Policy uncertainty, high taxation, and the pandemic-induced factors stymied growth in a segment which was to touch the 50,000 mark as early as in 2015, said Puneet Gupta, director at S&P Global Mobility, a provider of automotive data, analysis and insights. That is set to change now with multiple model launches, a pent-up demand and electrification trend that favours electric vehicles (EVs) compared to internal combustion engine models, he added.
Exemption from road tax in several states coupled with a low GST rate is helping e-luxury cars gain traction despite its steep prices.
S&P Global Mobility projects the luxury car segment to expand 25%-30% year on year in 2023. “The easing shortage of semiconductors and supplies of other parts, which enables European manufacturers to ramp up production, will fuel the growth,” Gupta said.
The onslaught of new model launches has already begun. Market leader Mercedes Benz has 10 new models lined up for launch this calendar year. BMW India launched the third generation X1 last week, and took wraps off the 7-Series and i-7 Series earlier this month. Audi will bring the Q8 e-tron and a few other models later this year.
“Demand at the higher end of the market is particularly strong and most of our launches this year would be in this segment,” Iyer of Mercedes Benz India said.
Cars priced above Rs 1 crore comprised 22% of the German carmaker’s total sales in India in 2022.
Naveen Soni, president of Lexus India, said, “The luxury segment could have easily surpassed the 2018 sales in 2022 but for the semiconductor shortage. With the availability improving, we expect sales to reach record levels (in 2023).”
The latest entrant in the luxury market saw its sales advance 76% in 2022 and is looking to double it this year. It presently has 17 outlets and a presence in 30 cities and will continue with the expansion in the current year, Soni said.
Lexus does not disclose sales. As per industry estimates, it delivered close to 1,000 units in India last year.