Mumbai: Herfried Hasenoehrl couldn’t possibly have hit a sweeter spot in India. Responsible for selling Rolls-Royce cars in Asia’s emerging markets, Hasenoehrl says his company has received more bookings than it expected for its iconic Phantom Series II saloon.
“We might have to ask for more cars than was allotted for India,” Hasenoehrl said in a phone interview from Singapore, but declined to share numbers.
The high price of cars such as the Phantom Series II, to be launched next month and expected to cost some Rs. 4 crore in the country, is not deterring wealthy buyers, although a slowing economy, higher duties and fuel prices have impacted sales in the so-called luxury segment—cars that cost Rs. 20 lakh or more. Sales of these models have expanded at their slowest pace in two years in the first five months of 2012.
The super rich who would like to own cars that cost upwards of Rs.1.5 crore seem to be immune to economic vagaries, and sales of envy-inducing automobiles from the stables of Rolls-Royce, Lamborghini, Ferrari, Bugatti, Maserati and Porsche continue to rise fast, albeit on a small base.
The economic downturn has little or no effect on households whose minimum average net worth exceeds Rs. 25 crore accumulated in the past 10 years, according to a recent study by Kotak Wealth Management and Crisil Research, a unit of the ratings agency.
The super rich have not stopped buying luxury gold or diamond jewellery, or stopped building plush private home theatres, said the study titled The Indian Ultra HNI | Untouched By Uncertainty. “There may have been some who have consciously scaled back on spending, but our survey indicates no discernible trend for this class as a whole.” HNI stands for high net-worth individual.
Indians bought an estimated 98-100 so-called super-luxury cars in 2011, a number that is expected to rise 50% by the end of the year, driven primarily by model launches, according to estimates by dealers and company executives.
Last year saw the introduction of eight super-luxury cars in India, highlighting the demand for the high-end models and taking the overall footprint of luxury car dealerships to 19, according to an analysis by Ernst and Young. The strong growth has surpassed forecasts for the fourth year in a row, the accounting firm said.
“Looking at the new model launches by most manufacturers and a focus on the tier 1 and tier 3 cities, I expect the number to go up by at least 50% in the current year,” says Ashish Chordia, whose firm Shreyans Group imports Ferrari, Maserati and Porsche cars in India. Between June and December last year, Chordia received 20 orders for Ferraris. He says his order book is looking good for the coming months as well. In the first three months ended 30 June, Shreyans has delivered at least 150 super cars.
Chordia said buyers may defer purchase by a couple of months, but there has been no cancellation. “This is primarily due to the fact that these purchases are aspirational purchases,” he said. “They (customers) have aspired for a Ferrari or a Maserati for years, and now when these brands are available in India, a temporary slowdown does not lead to a cancellation.”
Lalit Choudhary, managing director of Performance Cars, which imports Aston Martin into India, says the segment is still nascent and there’s ample scope for a lot more new models to be launched.
The British iconic brand launched the Vanquish on 1 August, priced at some Rs. 3.85 crore. Aston Martin has sold 40 cars in the 18 months it has been officially present in the country. Choudhary said he expects the Vanquish to account for 30% of total sales of Aston Martin in the year ending December.
“With new models, the segment has opened up in a big way in the last two-three years, attracting those at the top of the pyramid,” says Rahul Jain, a partner and director at Boston Consulting Group, a management consultancy. Sales have also been fuelled by the younger generation of the super wealthy, who are well travelled, socially networked and face higher peer pressure to display their opulence, Jain says.
Pavan Shetty, head of India operations at Automobili Lamborghini SpA, agrees. The age profile of his buyers has dropped from 35-50 years to 25-35 in recent years.
Although buyers have hardly deferred purchases because of the economic slowdown, they are not completely immune to it and his firm could have sold a few units more had it not been for the negative sentiments, Shetty says.
Lamborghini sells the Avantador (Rs. 4.2 crore) and the Gallardo (Rs. 2.5 crore) in India. It sold 14 cars in 2011 and plans to sell another 18-20 this year.
The Kotak-Crisil study places buyers of super luxury cars in three categories—self made, inheritors and professionals. A fact that separates the ordinary Indian from the ultra rich is the number of cars owned by the latter to suit their needs. On an average, an inheritor owns three-four cars, while a self-made person and a professional own one-two cars each.
Interestingly, the number of these people who owned more than four cars was more in the smaller cities than in the metros. Also, to avail tax benefits arising due to interest and depreciation deduction, a majority of the wealthy prefer to seek loans for such cars rather than pay cash even if they can afford it.
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