Luxury carmakers bet on small cities
Premium car makers have opened showrooms in tier-II cities
By : ashish kulshrestha
Update: 2015-06-20 07:11 GMT
Hyderabad: With the wealth of Indians soaring faster than other Asian peers, luxury car makers have started betting big on smaller cities, which have been hitherto ignored. In the past one year, premium car makers like BMW, Mercedes-Benz and Audi have opened showrooms in tier-II cities like Madurai, Vijayawada, Ranchi and Guwahati.
According to Audi India head Joe King, “Tier-II and tier-III cities are becoming the new hubs of luxury.” He indicated that this growth is being fueled by the rising purchasing power of the Indian youth. “The average age of an Indian millionaire has come down to 35-40 years from the earlier average of 50 years. An increasing number of young entrepreneurs and professionals from various fields in smaller cities are moving up to luxury cars and they has been boosting sales volumes,” Mr King added. The firm plans to have its presence in Rajkot soon.
Eberhard Kern, managing director, Mercedes-Benz India, refers to the acceleration in the economy as the factor driving growth in these areas. “There is a continued trend of global wealth creation, particularly in India, which has been a key driver for luxury automobile along with other industries. We expect this wealth creation in India to further accelerate with the number of HNI to double over the next decade,” he said.
This wealth creation coupled with the fact that luxury industry contributes a mere 1.3 per cent to the total passenger vehicle market, makes our outlook for the market positive and hence the robust projection, he added. One-third of the cars in this segment in India are under the Rs 30 lakh range.
According to Volvo Auto India MD Tom von Bonsdroff, “The affordability attached to luxury is what attracts the young in smaller cities”. The firm has six models out of which two are under the Rs 30 lakh price value.