Financial Daily from THE HINDU group of publications
Wednesday, Apr 28, 2004
Industry & Economy
Luxury car sales surge in Kerala
Vipin V. Nair
File photo of a Honda showroom in Kochi. K.K. Mustafah
Kochi , April 27
MERCS, Camrys, Accords, Vectras and other luxury cars and ritzy utility vehicles crowd Kochi's narrow roads, displaying new lifestyle, spending habits and wealth of Keralites and belaying the plight of their state's economy.
Sales of luxury vehicles, priced over Rs 10 lakh, are on the rise in Kerala, a State characterised by lower industrialisation and large-scale unemployment, as Malayalees discover a new way of moving around.
Though the numbers may look small in comparison with that in other states, what is significant about the State is that automobile sales here are driven by individuals. There is hardly any major corporate buying in the absence of major companies or industries in Kerala, which is now striving to attract investments.
"We expect to sell 110-120 cars in 2004, compared to 74 cars we sold last year," says Mr S. Sivakumar, Managing Director of Rajasree Motors, dealer of Mercedes-Benz cars in the State. An official at the dealerships says that Rajasree Motors had targeted to sell two `S' class, the top-end saloon, in 2004, but has already achieved that goal.
Honda Siel too hopes to sell more vehicles in Kerala this year. Honda's dealer in the State, Peninsular Honda, has sold eight Accords models and nine CR-V sports utility vehicles in Kerala in March alone. Sales of Honda City in the State hovers around 80-85 units a month, says Mr Mithesh K. Patel, Managing Director of Peninsular Honda.
Other premium models such as Opel Vectra, Skoda Octavia, Chevrolet Forester, Toyota Camry and Corolla and Ford Endeavour are also growing in numbers in Kerala. "The last two months have been too good for Vectra," says a dealer here. "We sold five cars."
After a price cut, sales of Forester also picked up with 12 units being sold during January-March this year, he claims. A Ford dealer in Kochi says that he has sold 20 Endeavour utility vehicles in just two months.
One of the main reasons for the jump in sales of such vehicles is the presence of large number of returnees from Gulf and the US in Kerala. For instance, as much as 30-40 per cent of Mercedes customers in the State are NRIs.
"These people were driving these vehicles when they were abroad and have experienced their virtues. Naturally they go for the same brands when they return," Mr Patel points out. Businessmen and professionals such as doctors are the other major category of buyers.
According to Mr Sailesh Shetty, Regional Manager, South of Toyota Kirloskar, the rebound of tourism in the State after being hit by 9/11 also helped sales of utility vehicles grow.
"In 2003, tourism was back. NRIs also are now bullish and the overall economy is doing well. This has impacted sales in Kerala too," Mr Shetty says.
Rising prices of rubber, one of the major cash crops in the State, has also put more money into the hands of car crazy. The increasing tendency among Keralites to upgrade to a bigger car from compacts is another reason cited for the growth.
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