Southern market fuels demand for luxury cars

The luxury car market is estimated to have annual sales of 33,000 vehicles, dominated by BMW, Mercedes and Audi

Luxury car makers are seeing a sharp uptick in demand down South with the rise of new-age entrepreneurs. Luxury car makers like Mercedes and Audi are growing at a faster rate in the South than in the northern region, the biggest market for luxury cars.

Sales volume growth in southern states is now neck and neck with the more established northern states for most luxury car makers. The South contributed 30 per cent to Mercedes's nationwide sales in the first six months of the year, up from 26 per cent in the year-ago period. The contribution of the North to Mercedes's overall sales has shrunk from 33 per cent in the first half of last year to 31 per cent this year.

The luxury car market is estimated to have annual sales of 33,000 units, dominated by Mercedes, Audi and BMW.

"As far as volumes are concerned, the South is now as important as the North and West. While the northern region continues to grow, the southern states are growing faster. The North is at a certain level and it is more difficult to grow at a consistent rate from there," said Eberhard Kern, managing director and chief executive officer, Mercedes-Benz India.

Mercedes has grown its volumes in the South by 46 per cent in the first half of this year, against the average national growth of 41 per cent. In the North, these grew 35 per cent.

Mercedes recently inaugurated its seventeenth outlet in the South in Mangaluru. The German luxury car maker has 74 outlets in India. Almost 50 per cent of the new network expansion this year is happening in the South, both in metro and Tier-II markets such as Bengaluru, Thiruvananthapuram and Mangaluru.

Later this month, the company plans to open three outlets in Chennai and two in Calicut. It is looking at more options.

Sharath Vijayaraghavan, executive director, Sundaram Motors,  a Mercedes dealer in Mangaluru, Bengaluru, Coimbatore and Madurai, said he was excited about the emerging opportunities in Mangaluru. "Our enthusiasm is reiterated by our new investments and new market expansion plans," he said.

Joe King, head of Audi India, said the macroeconomic factors were more stable in the southern markets than in the North and cities such as Bengaluru, Hyderabad, Chennai and Coimbatore were witnessing an increasing number of young entrepreneurs who aspired to own luxury brands.

"With the addition of Audi Bangalore Central and Audi Madurai this year, we are aiming at a bigger contribution from the region," King added.

Olympus Motors, Audi's dealer for Andhra Pradesh and Telangana, sold 454 cars in Hyderabad last year and 68 in Visakhapatnam. The dealer has plans to open an Audi outlet each in Hyderabad and Vijayawada in a year.

Audi and BMW have stopped sharing their sales data but they are also seeing a similar trend. "Although north India, specifically the National Capital Region, continues to be one of the strongest markets for us, the southern market is growing at the fastest rate," said King.

"The southern region is certainly one of the most important markets in India and continues to play an important role in BMW's growth strategy. A car is no longer treated as a 'necessity' but as a lifestyle choice. The number of cars in a family is sometimes higher than the number of family members," said Philipp von Sahr, president, BMW Group India.