India's car market is revving up
By Zubair Ahmed
BBC News, Mumbai
The luxury segment is thriving, says Mercedes-Benz's Mohan Mariwala
In India, cars are still a luxury, but a luxury a growing number of Indians can afford.
Small cars are cruising along, with sales growing at 17% a year.
But with growth rates of 28%, it is the luxury car segment that is racing in top gear.
Of the 20 new models to be launched in India during the second half of this year, several are luxury models.
For many Indians, cars are more a lifestyle statement than a status symbol.
Design and brand attract India's rich
Mohan Mariwala, a Mercedes Benz dealer in Mumbai (India's commercial capital formerly known as Bombay), says fuel efficiency and price tags are no longer the main deciding factors for the buyer.
"Design and appeal in addition to a brand," he says, "are the strongest drivers in the luxury and super luxury segments, such as Mercedes Benz."
"Our aim is to provide them with a wider range and the newest internationally launched products," says Mr Mariwala.
Among the cars on display in his showroom, there are more than just a few that cost more than what the average Indian will earn in a lifetime.
As if a price tag of $250,000 is not enough, Indians fancy buying even more expensive ones, such as Ferraris and Aston Martins, which are slated for launch in India later this year.
Suzuki changed the market
Time was when one had to wait for months, even years, to buy a car in India.
And the options of Indian drivers were limited to just a few home-made and heavy cars, such as the Ambassador.
The collaboration of the Japanese car giant Suzuki with Indian car maker Maruti completely changed the market.
Maruti 800, a small family car, became a prize possession for Indians.
Indian drivers upgrade
But now that too seems ancient in the current glut of new cars on Indian roads.
While Ambassadors still huff and puff and Maruti 800s are still revving about, it is Honda, Hyundai and scores of other models that have become the pride of Indian roads.
Porus Khareghat, a director of advertising films in Mumbai, wants to upgrade his small car to a bigger and better model.
He currently drives a small Maruti-Suzuki car.
But after days of research and test drives, he seems to have found the car of his choice.
"The first thing that I like about a car is the look, " he says looking at Tata Motors' latest offering, the Indigo Marina.
"I like the semi SUV look of this car. And secondly, because I have a bigger family now I need more space. After a lot of test drives and research I have almost made up my mind to buy this car."
From scooter to luxury wheels
This is the story of most car owners in India.
A liberal economic regime during the past 15 years has seen the rich becoming richer and the richer even wealthier.
As a result, those who had scooters or motor bikes are now buying cars and those driving small and inexpensive cars are upgrading to more expensive cars.
Mohan Mariwala at the Mercedes dealership says this is pushing up the demand for luxury cars.
A lot of customers driving Hondas and similar cars come to him to find out about Mercs, he says.
Easy money, attractive market
Last year more than one million cars were sold in India.
And sales figures are expected to surge for another 10 years. That makes India an extremely attractive market for international car giants.
Rising disposable incomes, a changing lifestyle and foreign travel are being attributed to the growth of the car industry.
But experts believe the main driver of the Indian car market is the availability of car finance on easy instalments and reasonable interest rates.
Banks are bending over backwards to lure customers in need of car loans.
According to industry estimates, 80% of the one million cars sold in 2004 were financed by bank loans.
And it seems there's no speed limit for the Indian car market as it races to catch up with the its great rival China.
Last year Chinese buyers turned the keys in more than twice the number of new cars.
Going cheap
But despite an ever increasing demand for luxury cars the small car segment is said to continue to lead the car market.
Dr V. Sumantran, executive director at Tata Motors passenger cars, says small cars will continue to rule the market.
He says: "While there will be expansion - without a doubt there will be expansion for premiered price luxury vehicles - one must remember that today over 90% of the vehicles in India are sold at a price of less than $15,000."
But among India's growing club of millionaires, brand counts more than the price tag and that is keeping the luxury car market revving.
Rolls-Royce launched in India this year (caption)