India's Luxury Car Market: The Competition Heats Up



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Code : COM0096

Year :
2005

Industry : Automobiles

Region : India

Teaching Note: Available

Structured Assignment : Available

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Introduction:In February 1996, when Daimler Chrysler (then Mercedes Benz) launched its car in India, it was the first premium car manufacturer to launch its product in the country. Nine years later in 2005, the luxury car market in India (defined as automobiles priced above $40,000) witnessed a flood of new entrants including Porsche and Rolls Royce. About 7,000 luxury cars are sold in India every year. With the Indian economy being one of the fastest growing economies in the world, analysts estimate that the luxury car segment would be growing at a rate of 28% annually, encouraging many international premium automobile manufacturers to launch their models in India. But in a country like India, where annual per capita income is around $550, Dr V. Sumantran, executive director at Tata Motors passenger cars, remarked that small cars would continue to rule the market. He said, "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."

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