The sales of affordable passenger vehicles may still be declining, but the demand downturn may just be over for luxury carmakers.
German carmaker Mercedes Benz said that the luxury car market in India has bottomed out after almost a year of declining sales. The country’s largest luxury carmaker’s sales improved 25% during the July-September period over the preceding quarter backed by a 29% uptick in sales in September from August. The sales in October too look better than September, Martin Schwenk, MD of Mercedes Benz India, told ET.
“We have bottomed out (in terms of sales decline). The industry, too, should have bottomed out. For our company, we are cautiously optimistic to come back up and make 2019 an exception and not the rule,” Schwenk said.
Last week, a spokesperson for BMW India, Mercedes’ closest rival in the country, too said that they see the demand improving slowly but steadily over the coming three to four quarters.
The sales of luxury cars in India have taken a beating amidst a wider consumption slowdown and a paucity of liquidity in the lending sector in the aftermath of the IL&FS crisis. With about 350,000 millionaires in the country and relatively less penetration of luxury cars as compared to developed economies, the luxury segment typically outperforms the overall market in India. However, the segment is headed for one of the worst sales declines ever this year in tandem with the overall car market.
During the nine-month period from January to September this year, the industry has collectively sold between 26,000 and 28,000 units of luxury cars, as per industry estimates, which is a drop of 20% over the same period last year.
Schwenk said that Mercedes is planning to launch one product every month on an average over the next few months, which will be accompanied by an expansion in the number of dealerships to bring more customers into its fold. Having sold almost 10,000 units during the nine months leading to September, the company expects sales to grow further in October followed by a dip in November, which is conventionally a slow month for car sales. “If we manage to reach the sales which we had in 2018, I would be fine,” Schwenk said about sales during the October to December period.