Premium car segment to see deluge of new entrants

Roudra Bhattacharya Mumbai | Updated on March 12, 2018

Niche carmakers from Europe could be a part of the next wave

If you are tired of seeing the same old cars on Indian roads, your eyes may soon get to feast on McLarens and Paganis zipping around.

As the mass car and bike markets get saturated with intense competition from a number of global players, it is now the turn of the premium segment to witness an explosion over the next few years.

Deluxe attraction

According to home grown advisory and entry consulting firm Tecnova, small volume niche (cars priced above Rs 1 crore) carmakers from Europe could be a part of the next wave of new entrants. Top-end bike companies such as Triumph and Husqvarna may also follow suit.

A racing economy generating an increasing number of high net worth individuals, coupled with growing aspirations to match the living standards of the West, is expected to create a huge demand for luxury products across consumer categories. The high demand for cars is exemplified by the fact that last year the Indian car market grew the second fastest globally after China.

Mass market crowded

“Most of the important mass market automakers are already here and that segment has become increasingly crowded. I feel the future would see many premium carmakers entering India. The average age of the millionaire is coming down and he is looking for more avenues to spend his money,” said Mr Ravi Avalur, Partner and Vice-President, Tecnova India.

In automobiles, such a trend has already been identified by few companies. In the first half of 2011, supercar and sports car makers such as Ferrari, Aston Martin and Maserati have set up shop, while bike manufacturers such as Aprilia and BMW Motorrad, have also rolled into the country.

Rising demand

Meanwhile, other premium brands such as Lamborghini, Bugatti, Bentley and Rolls-Royce are already doing brisk business. In 2010, the market for cars priced above Rs 1 crore grew 75 per cent to around 350 units. With many new players coming, this market is expected to double this year, Mr Avalur said.

Interestingly, the trend shows that while European premium automakers are racing with each other to attract the wealthy Indian customer, top-end Japanese and American brands have been slow to react. However, that could change soon if market rumours are to be followed. Toyota-owned Lexus and General Motors' Cadillac are reportedly looking for an opportune time to step in.

“Japanese brands such as Honda's Acura and Nissan's Infiniti have to wake up and see India as an important market. Premium American brands may find it tougher … market conditions here are very different from their home,” Mr Avalur said.

In the automotive sphere, Tecnova has worked with over 60 firms, which includes global majors such as Volkswagen and Harley-Davidson, in setting up their local operations. The firm provides assistance on market entry, advice on Government policy and legal issues, sourcing of components, hiring of key personnel, besides locating the right site for a manufacturing set up.


Published on June 19, 2011

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