New India Loves Lux Cars; Bids bye to Fuel Economy

Photo by Possessed Photography on Unsplash

India is driving its automobile economy to the next mile. 

Hatchbacks and sedans are a thing of the past. 

Sales of luxury cars are soaring high as we head towards adopting more SUVs. 

Carmakers also beamed with joy as they saw double-digit growth in sales during the first half of the year.

Inflation and recession looming in the air cannot stop India’s love for its luxury cars. 

Around 17,000 luxury vehicles were sold between January-June 2022 – an increase of 55% over 11,000 units sold in the year-ago period. 

Consumers continue purchasing despite long waiting periods, and companies are working hard to ease supply constraints and scale-up production.

German luxury car maker Mercedes- Benz India clocked its highest ever sales of 3,551 units in the June quarter.

Overall, the company increased retail sales by 56% to a record 7,573 units in the first 6 months of 2022 – clearly, living up to its motto of ‘Reimagining Excellence.’

Rival BMW, too, was close on the heels with a record sales of 5,570 cars in the country during the same period. 

Keepin’ It BIG

India’s love for its cars is not only growing but also changing. 

The market share for leader Maruti Suzuki has started to diminish as India sees a strong shift from hatchbacks and sedans to SUVs.

Gainers and Losers

Homegrown Tata Motors swung into a 5% operating margin at the end of FY22, after a  negative operating margin in FY19. 

Newbie Kia Motors has made a palace for itself in the top 5, only 3 years into its operation. 

Tata and Kia India both have been the biggest gainers in profits – thanks to their early realization of bringing in SUVs.  

Not too far behind is Korean automaker Hyundai fighting for the number 2 spot – which operated in a double-digit margin between FY19 and FY21.

Mahindra is also making a smart comeback with the new Thar, XuV 700, and the much-awaited EV cars, of course.

Downer

While Maruti Suzuki leads in market share, its operating margin over the last few years has declined by over 500 basis points. 

To make up for it, the company plans to launch new models in the SUV segment (overall market share of 13%). 

While in the non-SUV space (market share 67%), the company plans to ramp up the good ol’ hatchbacks, sedans, and vans with new features, technology, and aggressive design language. 

Too long? Here’s a one-liner: Automobile sales and revenue soar as sales of luxury cars increase in India; SUVs are in demand more than ever; Maruti is to launch new models and ramp up models to keep up with rivals.

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