Luxury car market is making V-shaped recovery. What are the driving factors?

Luxury car market is making V-shaped recovery.  What are the driving factors?

Luxury car market is making V-shaped recovery. What are the driving factors?

Despite the semiconductor shortage still crippling the auto sector on a large scale, luxury car manufacturers are seeing strong demand for high-end models, a trend that manufacturers attribute to a shift in consumer behavior, a growing number of successful startups and affluent customers. .

Furthermore, these luxury carmakers expect 2022 to be the best ever in terms of sales, which will improve volumes from 2019. The companies also expect the ongoing festive season to be robust in terms of shipments, despite chip shortage issues continuing.

The domestic volume of luxury cars was about 40,000 units in 2019, the industry’s best shipments ever recorded in a year to date.

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“The industry has become more resilient and now that the third wave of Covid is not as severe there has been a steady rebound,” the PTI news agency quoted Lexus India president Naveen Soni as saying in an interview.

The luxury car market is on a V-shaped recovery path with strong demand from luxury consumers, mainly attributed to change in consumer behavior, more successful startups, younger affluent consumers and local manufacturing, leading to a higher sense of value, he added. ready.

Soni noted that the current year has started well for both the industry and Lexus India.

“We hope luxury car demand will surpass 2019’s pre-pandemic level, which was the highest ever, while demand for Lexus in India surpassed the highest demand ever since the launch of the business in 2017 in July.” he says. added.

Asked about holiday sales, Soni said, “We expect demand for Lexus cars to be three times what we’ve seen since the brand’s launch in 2017.”

Mercedes-Benz India MD & CEO Martin Schwenk said the company expects the strong sales momentum of the second quarter to continue into the coming holiday season as customer sentiment remains very positive.

“The challenges remain on the supply side, however, as we expect the semiconductor shortage to continue through the holiday season,” he added.

Echoing similar sentiments, Audi India said demand has grown steadily in recent months and the automaker expects it to continue in the period ahead.

“We are continuously working with our headquarters to get additional allocations for India to meet this growing demand,” said Audi India Head Balbir Singh Dhillon.

Currently, luxury car volumes account for less than 2 percent of total passenger car sales per year and the industry has been more or less at the same level over the past decade.

Luxury models in India attract the top GST bracket of 28 percent with an additional tax of 20 percent on sedans and 22 percent on SUVs, raising the overall tax burden to 50 percent.