Luxury, as Coco Chanel aptly said, is a necessity beyond the basics. In today’s world, this rings particularly true for premium cars, where luxury meets innovation. Santosh Iyer, MD & CEO of Mercedes-Benz India, shared his perspectives on the evolving luxury car market in a recent interview with Arun Malhotra, an industry expert.
Changing Consumer Behavior
Iyer reflects on the transformation of consumer behavior over the years. Traditionally, buyers were more rational and less informed about cars. Today, consumers are extensively researching online, diving deep into brand history and technology. As Iyer notes, “Sometimes, they even know a bit more than our sales guys.”
He recalls Mercedes-Benz’s journey, from selling 3,000 cars annually when he joined in 2009 to a remarkable 16,000 cars last year. The industry’s growth is evident, and it’s evolving.
Two Types of Consumers
Iyer distinguishes between two types of luxury car consumers: “luxury dwellers” who’ve been accustomed to luxury from a young age, and “aspirational buyers” who transition from mass-market cars to luxury. These segments have unique needs and preferences.
The Luxury Potential in India
Despite a wealth of millionaires, only about 6%-8% buy luxury cars in India. Iyer believes that a shift toward a younger, more daring, and exposed generation will drive luxury consumption in India. The potential exists, but it won’t happen automatically. It requires efforts to stimulate demand.
Creating Luxury Experiences
Mercedes-Benz is embracing experiential marketing, organizing Instagram-worthy experiences. However, the real challenge lies in the interaction between the sales consultants and customers. In India, a luxury ecosystem is still emerging, making it challenging to find trained professionals. To address this, Mercedes-Benz partnered with EHL Hospitality Business School to train individuals for luxury experiences.
Opportunity for Growth
Positive signs of luxury consumption are visible. Even small-ticket items like branded coffee and costly mobile phones are popular. Corporate earnings are strong, with many top-level executives and SME owners becoming luxury car consumers. Customers are willing to pay a premium but expect a seamless experience with their luxury cars.
The Road Ahead
Santosh Iyer envisions the luxury car market in India expanding from 40,000 units to 70,000-80,000 units by 2030. The growth will depend on economic factors and EV adoption. He believes that by 2030, electric vehicles will account for more than 50% of the luxury car segment.
Challenges and EVs
Challenges remain, such as varying state road tax policies on EVs. Iyer suggests that it’s too early to withdraw tax exemptions on electric vehicles. Consistency in EV policies, ongoing infrastructure development, and stable GDP growth will drive the steady increase of luxury car sales in India.
The luxury car landscape in India is evolving, and Mercedes-Benz is at the forefront of delivering exceptional experiences and innovation to meet the diverse needs of its discerning customers.