Mercedes-Benz bets on India’s nouveau riche to drive luxurious automotive gross sales

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PUNE — Germany’s Mercedes-Benz is betting {that a} rising crop of younger new millionaires will drive demand for luxurious vehicles in India, rising gross sales at a tempo sooner than that of mass market vehicles, a high firm official stated.

India’s rising numbers of “greenback millionaires” embrace younger entrepreneurs or high-earning professionals who admire the posh factor and know-how of the vehicles, stated Martin Schwenk, chief government of Mercedes-Benz India.

“The bottom is getting broader and regularly shifting past our conventional clients,” Schwenk instructed Reuters in a latest interview within the western industrial metropolis of Pune, dwelling to Mercedes’ India headquarters and manufacturing plant.

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“Going ahead we’ll see greater development charges within the luxurious section than we see within the mass market,” he stated, including that consumers’ common age had additionally fallen under 40, from greater than 45 earlier.

World carmakers’ largest development hurdle, nevertheless, is a scarcity 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 vehicles, Schwenk stated.

India’s start-up frenzy and inventory market growth are creating a brand new breed of rich splurgers on luxurious manufacturers akin to Rolex, Louis Vuitton and Gucci, the 2021 Hurun India Wealth Report confirmed.

The variety of Indian households with a internet value of at the least one million {dollars} grew 11% in 2021 to 458,000 and is anticipated to extend by 30% over the following 5 years, the report stated.

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India is essentially a small and low-cost automotive market wherein luxurious fashions account for simply over 1% of complete annual gross sales of about 3 million.

Mercedes is the top-selling luxurious model, with a market share of greater than 40%, says auto market information supplier JATO Dynamics, and it competes with Audi, BMW and Tata Motors’ Jaguar Land Rover.

Its India gross sales rose greater than 40% to 11,242 vehicles in 2021, coming off a low of seven,893 in the course of the pandemic-hit yr of 2020.

However Mercedes noticed development of 80% in top-end fashions such because the GLS, S-Class and GLS Maybach, all vehicles costing greater than 10 million rupees ($131,337).

Schwenk stated whereas the pandemic had pushed a few of this demand, as extra folks “spent for their very own pleasure,” India’s luxurious automotive market confirmed potential for greater development, a function lacking over the past six to eight years.

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To capitalize on the momentum, the corporate plans to launch 10 fashions in 2022, together with its regionally assembled electrical sedan EQS.

Whereas development in India’s luxurious and mass markets should not straight comparable, Mercedes’ high-end fashions doing effectively displays the wealth of the nation, stated Ravi Bhatia, president for India at JATO.

“The wealthy have change into richer and a few of them have ended up upgrading their life-style,” Bhatia stated.

JATO’s evaluation additionally confirmed that Mercedes’ product combine and pricing led to a decrease common weighted worth of its vehicles, placing upgrades to the posh section inside attain of extra clients, he added.

Mercedes’ gross sales in 2021, nevertheless, are nonetheless decrease than its peak of greater than 15,500 vehicles in 2018. Schwenk stated gross sales might method 2018 ranges this yr if there have been no additional provide chain disruptions on account of COVID or geopolitical points. (Reporting by Aditi Shah; Modifying by Clarence Fernandez)