Mercedes Benz retains leadership in Indian market for third straight year

Mercedes Benz, India’s biggest German luxury car maker by sales, will retain leadership in the fiercely competitive Indian luxury car market for third year in a row.

The Pune-headquartered three-pointed star brand’s sales volumes jumped 22.5 per cent at 16,236 cars in financial year ended March, up from 13,259 units it sold last year. Its Jan-March quarterly sales also soared 24.8 per cent to 4,556 units. Mercedes-Benz India will launch 10 new products in 2018 to sustain growth and leadership.

It compatriot archrival BMW is estimated to have sold over 10,000 cars though the company is yet to reveal its sales figures. BMW had sold 9,800 cars in Jan-December calendar year. The third biggest German luxury car brand, Audi sold 7.3 per cent more cars last financial year at 7,647 cars, up from 7,101 units it sold in the previous year.

Automakers said strong demand for sports utility vehicles or SUVs, pre-GST buying over fears of a price hike drove luxury car sales at fastest pace last year in Asia’s third biggest economy. The fourth in the pecking order, the Tata Motors-owned British iconic sports car maker, Jaguar Land Rover sold 83 per cent more cars at 4, 609 units last fiscal.

The maker of popular cars such as Land Rover Discovery, Range Rover Velar and Jaguar F-Pace plans to launch at least ten new cars during this financial year to sustain growth achieved last year.

Swedish luxury car brand, Volvo Cars is also estimated to have sold over 2,157 units in financial year ended March. It has retailed 2,029 cars last Jan-December calendar year, clocking 28 per cent growth.

Luxury car makers are now cautious that last year’s sales momentummight be tough and challenging to sustain due to hike in customs duty on CKD (completely knocked down kits) imported cars from 10 per cent to 15 per cent. In the last Budget the government had also raised customs duty on specified parts and accessories from 7.5 per cent to 15 per cent.

Luxury car manufacturers, who have not passed this hike to their customers, are likely to do so shortly by raising prices of the cars.

They are also now cautious on the growth prospect this year.

“The year began on a positive note for the brand, though the spike in demand in the first quarter can be attributed to the advancement of sales due to the impending price correction, triggered primarily by the increase in basic customs duty,” Roland Folger, managing director and CEO at Mercedes India, said.

“It might be a challenge to sustain this momentum in the coming quarters and we are cautiously optimistic,” he said.

As the luxury industry volumes are comparatively low, the focus should remain on helping the industry grow by creating demand, Folger said.

Rahil Ansari, head at Audi India told Financial Chronicle that the luxury car market in India was stabilising now after the shock of GST and cess increase on the luxury cars.

“We expect the performance for the rest of the year to be flat owing to volatile economic indicators and some selected supply constraints,” he said. Rohit Suri, president and managing director at Jaguar Land Rover India said although the company India outpaced the industry growth, clocking an 83 per cent rise in FY 17-18 on account of growing popularity of its two iconic brands, he foresees the overall segment growth being stunted and restricted in FY 18-19.

Michael Gonsalves