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Mercedes-Benz bets on India’s nouveau riche to drive luxurious automobile gross sales

A Mercedes-Benz ticket is viewed on S500 automobile at the firm’s automobile assembly plant in Chakan, exterior Pune, India, June 11, 2015. . REUTERS/Danish Siddiqui/File Photo

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  • Launch-up frenzy, stock market growth carry out new millionaires
  • Common age of Mercedes automobile buyer lower than 40 years
  • Sale of its top-cease luxurious devices grew 80% in 2021

PUNE, India, April 12 (Reuters) – Germany’s Mercedes-Benz (MBGn.DE) is making a wager that an growing pool of young new millionaires will drive build a query to for luxurious vehicles in India, developing quicker gross sales growth than for mass market vehicles, a top firm reliable acknowledged.

India’s growing numbers of “greenback millionaires” embody young entrepreneurs or excessive-incomes mavens who cherish the lush component and know-how of the vehicles, acknowledged Martin Schwenk, chief govt of Mercedes-Benz India.

“The wrong is getting broader and incessantly sharp beyond our old prospects,” Schwenk rapid Reuters in a fresh interview in the western industrial city of Pune, home to Mercedes’ India headquarters and manufacturing plant.

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“Going forward we can peer greater growth rates in the lush segment than we peer in the mass market,” he acknowledged, alongside with that customers’ moderate age had also fallen below 40, from more than 45 earlier.

Mercedes is the cease-selling luxurious automobile ticket in India, with a market share of more than 40%, says auto market data provider JATO Dynamics, and it competes with Audi, BMW (BMWG.DE) and Tata Motors’ (TAMO.NS) Jaguar Land Rover.

International carmakers’ most inviting growth hurdle is a scarcity of semiconductors and logistics woes worsened by Russia’s invasion of Ukraine. For Mercedes India, this has resulted in an voice backlog of 4,000 vehicles and wait times of more than six months in some cases, Schwenk acknowledged.

“We dangle very correct gross sales momentum, the worries are on the availability aspect. You’d just dangle got congestion at the ports that motive truly important delays and that is hampering our output,” he acknowledged.

India’s open-up frenzy and stock market growth are developing a new breed of rich splurgers on luxurious producers corresponding to Rolex, Louis Vuitton and Gucci, the 2021 Hurun India Wealth File showed.

The number of Indian households with a catch rate of at least a million greenbacks grew 11% in 2021 to 458,000 and is anticipated to produce bigger by 30% over the next 5 years, the account acknowledged.

India is primarily a minute and low-rate automobile market whereby luxurious devices story for honest over 1% of total annual gross sales of about 3 million.

Mercedes’ India gross sales rose more than 40% to 11,242 vehicles in 2021, coming off a low of seven,893 at some stage in the pandemic-hit year of 2020.

However the carmaker seen growth of 80% in top-cease devices corresponding to the GLS, S-Class and GLS Maybach, all vehicles costing more than 10 million rupees ($131,337).

Schwenk acknowledged whereas the pandemic had driven some of this build a query to, as more folks “spent for their maintain pleasure”, India’s luxurious automobile market showed doable for greater growth, a characteristic lacking over the closing six to eight years.

To capitalise on the momentum, the firm plans to open 10 devices in 2022, alongside with its in the neighborhood assembled electrical sedan EQS. read more

While growth in India’s luxurious and mass markets are circuitously similar, Mercedes’ excessive-cease devices doing successfully shows the wealth of the nation, acknowledged Ravi Bhatia, president for India at JATO.

“The rich dangle change into richer and a few of them dangle ended up upgrading their daily life,” Bhatia acknowledged.

JATO’s prognosis also showed that Mercedes’ product combine and pricing resulted in a lower moderate weighted mark of its vehicles, striking upgrades to the lush segment within attain of more prospects, he added.

Mercedes’ gross sales in India in 2021, on the opposite hand, had been tranquil lower than its height of more than 15,500 vehicles in 2018. Schwenk acknowledged gross sales might perhaps skill 2018 phases this year if there had been no further supply chain disruptions resulting from COVID or geopolitical concerns.

Lowering Indian taxes on luxurious vehicles, which he acknowledged had been amongst the finest in the world, would also motivate grow the segment and succor the auto market.

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Reporting by Aditi Shah; Making improvements to by Clarence Fernandez and Susan Fenton

Our Requirements: The Thomson Reuters Have confidence Principles.

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