NEW DELHI: Luxury car sales have decelerated. With the stock market remaining volatile through most of last year and liquidity pressure growing, reluctant buyers stayed away from new purchases or upgrades, leading to 5 per cent growth in volumes in 2018 against a 17 per cent surge in the previous year.
Luxury car makers like Mercedes-Benz and Audi are a worried lot, especially as the liquidity crunch is impacting operations of many of their customers. “A large number of our buyers are from the SME sector. When they cannot even procure working capital comfortably, how can we expect them to buy new cars?” one leading luxury dealer said.
Martin Schwenk, newly-appointed MD & CEO of Mercedes India, said there is nervousness in the market. “I am here since last two months, and I have met our dealers, investors and customers. Honestly, I saw a lot of hesitation based on the overall economic development… (the) hesitation is based on volatility in markets, and the credit situation specifically.”
Rahil Ansari, the head of Audi in India, feels that the pain may be there for some more time. “Luxury car purchase is not the biggest necessity that people have currently.” Ansari attributed Audi’s poor showing to the closure of two dealerships in the Delhi-NCR region after the promoter was found to be indulging in unlawful activities.
Rohit Suri, MD of JLR India, said the second half of 2018 was particularly tough due to tight liquidity condition, higher upfront insurance costs and increased lending rates. A low-key third quarter (July-September) impacted the industry as demand was tight on weaker rupee and high fuel prices.
Ravi G Bhatia, India president for global automotive data and consultancy firm JATO, said he expects growth to be difficult in the short term. “The segment is weighed down by the burden of excessive duty and lack of aggressiveness from stakeholders to grow the market. We need strong local strategies.”