Aditi Sharma

PUNE, India (Reuters). Germany’s Mercedes-Benz bets that India will see a growing number of new millionaires, which in turn will lead to a higher demand for luxury vehicles, resulting in faster sales growth than mass-market cars.

According to Martin Schwenk (chief executive at Mercedes-Benz India), India has a growing number of “dollar millionaires”. These include entrepreneurs and high-earning professionals, who value the technology in cars.

Schwenk said that the base was expanding and moving away from our old customers in a recent interview with Reuters. Schwenk spoke to Reuters in Pune, a western industrial town where Mercedes India’s headquarters is located.

“Going forward, we will see higher growth rate in the luxury sector than we see for the mass market,” said he, noting that the buyers’ average age has fallen below 40 since they were more than 45 earlier.

According to JATO Dynamics auto market data provider JATO Dynamic, Mercedes tops the Indian luxury car market with a market share exceeding 40%. It competes against BMW, Audi and BMW. Tata Motors (NYSE:) Land Rover

A shortage in semiconductors and logistic woes that were made worse by Russia’s invasion of Ukraine are the biggest challenges facing global carmakers. Schwenk stated that Mercedes India has a backlog of over 4,000 vehicles and wait times exceeding six months for some orders.

We have very strong sales momentum. The concern is on the supply side. “You have congestion at ports which causes really serious delays and that is hindering our output,” said he.

According to the 2021 Hurun India Wealth Report, India’s start up frenzy, stock market boom, are creating wealthy new breeds of wealthy splurgers for luxury brands such Rolex and Louis Vuitton.

According to the report, Indian households that have a net worth at least one million dollars increased 11% to 458,000 in 2021. This number is forecast to rise by 30% over five years.

India has a large and small car market. Luxury models make up just 1% of the country’s annual total of approximately 3 million.

Mercedes’ India sales grew more than 40%, to 11,242 vehicles in 2021. This is a significant increase from the low of 7,893 that Mercedes had during 2020’s pandemic.

However, the company saw a growth of 80% on top-end models, such as the GLS and S-Class or GLS Maybach. These cars are all more expensive than 10 millions rupees ($131 337).

Schwenk stated that while there was some demand from the pandemic, India’s luxury market for cars showed the potential to grow faster than the rest of the world. This feature has been missing for the past six to eight decades.

In order to capitalise upon the momentum, 10 models will be launched by the company in 2022. This includes its locally manufactured electric sedan, EQS.

Ravi Bhatia is the president of JATO India. While India’s growth in luxury and mass market aren’t directly comparable. However, Mercedes’ success with high-end models reflects India’s wealth.

Bhatia stated that the rich are becoming more wealthy and have upgraded their lifestyles.

JATO also found that Mercedes’ pricing and product mix led to a lower average weighted car price. This allowed more people to upgrade to its luxury segments, he said.

In India, Mercedes’ 2021 sales were less than their peak in 2018 of 15,500 cars. Schwenk indicated that India’s Mercedes sales may reach 2018 levels in 2021 if the supply chain is not interrupted by COVID or other geopolitical factors.

Indian luxury vehicle taxes would be a boon for the Indian market by lowering them.