Luxury car sales may treble to 100,000 by 2020: ICRA

India's luxury car sales are set to triple from 33,000 a year now to 100,000 by 2020, according to credit rating agency ICRA.

"Around 1,80,000 Indians are estimated to be dollar millionaires and the number of people in this category is expected to grow at a rapid pace, providing an attractive growth potential for global luxury car manufacturers," a recent ICRA report stated.

Luxury car sales in the country were less than 1.5 per cent of overall sales, much lower than the global average, ICRA said. Despite this, luxury car makers are betting on aspiration and the rising incomes of India's upper middle class.

"Along with the metropolitan centres, we foresee growth among young achievers, predominantly from Tier-I and Tier-II cities, who have a dynamic attitude and are technology savvy," said Philipp von Sahr, president, BMW Group India. "We find a strong correlation between incremental affluent households and luxury car sales," the report stated.

"Today there are multiple cars in an upper-middle class family, especially in a city, and most go for at least one luxury car," said Mohan Himmatsingka, president of the Federation of Automobile Dealers' Associations.

"If someone has made up his mind to buy a luxury brand, he will not settle for a mid-range passenger car. The segment with cars priced Rs 20 lakh and above is set to see robust demand in the coming years," he added.

The luxury car segment has posted strong growth over the years. From 4,000 cars in 2007, sales have risen to 33,000 at present. "Mercedes and BMW are available with easy financing, and the companies have re-aligned their strategy to cater to growing demand from young professionals," said Abdul Majeed, partner, PwC India.

Competition among luxury car makers has also become more fierce. According to an Audi India statement, the company sold 11,292 vehicles in 2014-15, 11.51 per cent more than in the previous year. Rival Mercedes Benz sold 11,213 vehicles in 2014-15, 18 per cent more than a year ago.

In January-March 2015 Mercedes increased its sales by 40 per cent over the same quarter a year ago to 3,566 vehicles and Audi by 16 per cent growth to 3,181.

"We expect our Q2 2015 (April-June) growth rate to be as strong as our Q1 (January to March) growth. This will be the third year in a row that Mercedes-Benz will register strong double-digit growth in India," said Eberhard Kern, managing director and chief executive officer, Mercedes-Benz India.