Luxury car market could recover quicker than others from pandemic woes in India

More than 50 units of the Mercedes Maybach GLS 600, priced at 2.43 crore (ex showroom) and launched in India on Tuesday, have already been booked. In a sign that luxury car makers like Mercedes, BMW, Audi and more may come out of the pandemic storm bruised but not severely injured may well be on the proverbial wall. And while Covid-19 pandemic has had an adverse impact on the auto industry at large, it is the luxury car segment, small as it may be in India, that could emerge stronger before those in the mass-market passenger vehicle segment.

Riding out the pandemic storm in luxury or giving car-buying decisions a strong re-think - PV segments may see varying sentiments.
Riding out the pandemic storm in luxury or giving car-buying decisions a strong re-think - PV segments may see varying sentiments.

One of the possible reasons for luxury car makers faring better and emerging out of pandemic blues quicker could be that the lockdown and restrictions may not have affected luxury car buyers as much as those in the mass-market segment. High-net-worth individuals (HNWI) may have only pushed back purchase decisions rather than put these off completely. On the contrary, the salaried class, or a large chunk of it at least, has had to mostly face salary cuts and are more likely to strongly re-think car-buying decisions. Credit rating agency ICRA also pointed out that the domestic passenger vehicle (PV) segment - largely powered by mass-market cars - would also see a softening of demand due to the spread of pandemic to hinterlands.

Another factor that could help luxury car manufactures is that some of the key players have a strong lineup of existing and/or new offerings. Mercedes has confirmed its plans of 15 products for India this calendar year are in place. Audi has been gearing up to drive in its e-tron EV. And Volvo hasn't announced any plans to push back its EV launch timelines so far. There's however, not much yet that is happening as far as OEMs playing in the mass-market are concerned. Hyudnai, for instance, is readying the Alcazar and even if a launch is imminent, there's no confirmed date yet. The updated Maruti Celerio has no launch timelines either. Tata Motors launched Safari to positive response earlier this year but are yet to make any product-related announcements yet. Skoda may be the only exception here and has the new Octavia and the all-new Kushaq ready for launch.

Most industry experts agree that it is going to be a bit of a wait and watch scenario for OEMs, especially those in the non-luxury segment. "The state of the (auto) industry could hardly be worse," Murad Ali Baig, auto expert and industry veteran, recently said during an interaction with HT Auto. "Let me say very bluntly - in the short term, it would be quite bad. Not only have people been immobilized during this lockdown, they have also been short of finances. Earnings and savings have been affected."

There are also others who argue that the record rates of petrol and diesel are likely to have some detrimental impact on cars. Customers could indeed take triple-digit rates into strong consideration when making purchase decisions.

But it is the need for personal mobility that still remains a hope for most OEMs in mass-market space. "It all really depends on how quickly Covid cases go down," said Shashank Srivastava. "And if it (pandemic) goes away quickly, then I can say human sentiments are very transient. It can become as positive as quickly it becomes negative."

MG Motors' Gaurav Gupta agrees for most parts. "I am not saying there will be a faster rebound (when compared to last year). I am saying that the automotive industry provides a safe mobility bubble and post massive vaccination drive, there will be mobility of people," he says, adding that the months of July and August would be crucial to gauge trends.

First Published Date: 08 Jun 2021, 14:50 PM IST
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