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Luxury car sales in 2019 see biggest drop in over a decade

Sales of luxury cars in India declined by about 15% last year — the steepest drop in more than a decade.

, ET Bureau|
Last Updated: Jan 09, 2020, 08.07 PM IST
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NEW DELHI: Sales of luxury cars in India declined by about 15% last year — the steepest drop in more than a decade — as a slump in economic activity, high import duty and expectation of a reduction in goods and services tax (GST) rates weighed on demand.

As per industry estimates, 34,500 to 35,500 luxury cars were sold in the country in 2019, compared with 40,340 units sold in 2018. Several senior company executives ETspoke with said they expect demand to revive after April 2020 when BS-VI emission norms kick in.

Martin Schwenk, managing director at market leader Mercedes-Benz India, admitted 2019 was a “challenging year”. However, the company, along with its dealer partners, continued to invest in customercentric initiatives and did not significantly change any of its plans.

“(It) got us back to positive growth in the last quarter. We also had a good festive season where we were able to generate positive sentiments in the market,” said Schwenk, who is also the CEO.

“Mercedes-Benz continues to remain optimistic on the luxury auto market in India in the mid to long term, and we are positive with our 2020 outlook.” The company will launch a vehicle every month in 2020 to buoy volumes.”

Luxury vehicles account for less than 1.2% of the overall automobile market in India, compared with 13% in China and 10% in the US. India has more than 350,000 millionaires, but the market size is yet to cross 50,000 units a year.

9th jan luxurycar graph


“Recovery in the overall economy, additional measures undertaken by the government to reduce GST, import duties, registration taxes on (luxury) cars and support by banks/NBFCs to offer easy access to loans for dealers and customers will help expand the market and boost the overall industry,” said Balbir Singh Dhillon, head, Audi India.

Dhillon expects the luxury car segment in the local market to remain flat in 2020, and to grow thereafter. Audi has scheduled multiple launches, including SUV Q8 and sedan A8, to revive demand.

Charles Frump, managing director at Volvo Cars India, was more optimistic. “In our assessment, people had postponed purchases last year, but we are seeing a lot of interest now. The demand is going to pick up April onward as BS-VI comes into force. With a current market share of less than 2%, luxury car segment has tremendous growth potential. We are hopeful of returning to 2018 sales numbers this year,” said Frump.
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