As land deals pick up in Gujarat, the farmers or landowners are laughing their way to the banks in their newly bought 'luxury' cars!
While Gujarat is fast emerging as a market for luxury cars, farmers in the state as well as people with landbanks are increasingly taking to luxury cars. "They are cash-rich and are opting for premium cars as a status statement", said Paras Somani, executive director, Benchmark Cars, the Mercedes dealer in Ahmedabad. Somani's dealership has seen the number of farmers buying Mercedes as a percentage of net sales go up from two to three per cent around four years back to around 10 per cent now. His dealership sells around 50-55 cars per month. "Around 60-70 per cent of customers go for financing options, but, farmers usually prefer to purchase outright", Somani says.
Mercedes has sold 5,800 cars in 2010 across the country and around 1800 units in the period between January to March 2011. Sanjay Thakker, owner of the Mercedes dealership chain in Gujarat informed that over 400 cars were sold in the state during 2010, a growth of around 50 per cent over 2009. Thakker added that the first quarter of the current calendar year has already seen a 50 per cent growth over the corresponding quarter last year.
A source in Mercedes Benz India said, "While the national luxury car market has grown at a 48 per cent rate during the first quarter of 2011, majority of the demand is indeed coming in from the west and southern markets which are clocking very healthy growth rates, mainly because of the low base in markets like Gujarat and some southern pockets".
Coming back to Gujarat, the five Vibrant Gujarat Summits have brought in investment commitments running into a few lakh crores, and together with it demand for land for setting up industry. Land deals have picked up as a result, both by state government agencies as well as private land deals. The Gujarat Industrial Development Corporation (GIDC) alone has acquired 7,642.63 hectares between 2005-06 to 2009-10.
Sanand is a ready example. After the Tata Nano was parked at this non-descript town close to Ahmedabad, at least 12,000 land deals have happened in the area in the last three years. And the prices have soared by around eight times during this period, from Rs 5-6 lakh per bigha to Rs 40-45 lakh a bigha now. While only seven farmers had sold land to make way for the Tata Nano factory, land deals started picking up after the GIDC announced its plans to come up with an engineering estate near the Nano plant.
S Bagga, director, Group Planet Petal, which runs dealerships of Japanese automaker Nissan in the city attributes the trend to the changing lifestyles. "The propensity to spend has grown among Gujaratis. Earlier the focus was more on savings, but people now want luxury brands whether it is in clothing or in cars or premium real estate." He adds that on top of this, with rising land prices, people with huge landholdings have made quick money and one of the first things people spend on once they have sold land is buy a luxury car.
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Bagga says that as land prices are hovering around Rs 45-50 lakh per bigha in villages around Ahmedabad, many farmers in these villages have made a few crores in cash by selling a few acres. "Yes, the proportion of farmers as customers of our premium range of cars like the Teana sedan and the X-Trail SUV (sports utility vehicle) is on the rise. Around 15-20 per cent of premium car sales per month goes to this segment.", he asserts. The purchase decisions are usually spontaneous, and most go for cash down-payments, he adds. Nissan has managed to sell 81 completely built units (CBUs) or its premium cars like the Teana, X-Trail and 370-Z in Gujarat during 2010, which is roughly 11-12 per cent of its national CBU sales. The company runs four dealerships in the state, at Ahmedabad, Rajkot, Surat and Vadodara, most of which came up during 2010.
German luxury carmaker BMW, however, declined to profile its customers as farmers and non-farmers. The BMW dealer in Ahmedabad, nonetheless, admitted that demand for luxury cars has risen among people who own land banks in rural areas.
Talha Sareshwala, managing director of Parsoli Motors, the BMW dealer in Ahmedabad and Surat, said, "On the whole the premium car market in the state is doing extremely well, clocking a growth rate of around 35-40 per cent on a year-on-year basis in comparison to the national average of 30 per cent. We over-achieved our target last year. We sold 309 cars as against a target of 200, and in 2011 we are aiming to sell over 450 cars across Gujarat." BMW has delivered 6246 cars to its customers during 2010, and has sold 2147 cars till March this year. Buoyed by the huge response in Ahmedabad, Parsoli Motors recently opened BMW's second dealership in the state in Surat.
Sareshwala interestingly pointed out that the Gujarat story is a little different from the Punjab experience, where rich farmers have pushed the luxury car sales in the state. It is common to spot a Merc or an Audi parked outside a farmer's village house in places like Ludhiana. "I feel only a little percentage of these cars sold to landowners go to the villages, many of whom have eventually shifted to cities like Ahmedabad", he adds.
Another German luxury car brand, Audi, has managed to grow by 60 per cent during the first quarter of 2011 selling 125 cars in Gujarat. "We sold around 300 cars in 2010, growing by around 50 per cent over previous year", said Samir Mistry, owner of Audi dealership in Ahmedabad. Like BMW, Audi is also planning to set foot on Surat soil soon as Mistry's dealership comes up in the diamond city within a couple of months. The premium carmaker sold 3003 cars nationally between January to December last year and has sold 1611 cars so far this year. Our growth in the state has been in line with Audi's national growth rate, Mistry added.