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India’s luxury vehicle market set to grow 21 percent in 2018
Luxury vehicle sales in India grew by 14.8% year on year (y/y) to nearly 38,800 units during 2017, from nearly 33,800 units in 2016. Luxury automakers are looking forward to a robust year in 2018, helped by new launches such as the all-new Audi Q5 SUV and Land Rover Velar. According to IHS Markit forecasts, combined sales of Mercedes, BMW, Audi, JLR, and Volvo in India are likely to grow by 19.5% y/y to nearly 45,322 units in 2018. Overall, sales are expected to grow 21% y/y to 46,921 units in 2018.
Percentage growth in the luxury market in India is expected to remain in double digits according to our forecasts, with luxury vehicle sales nearly doubling in the next five years as market penetration and evolution gain further momentum. Luxury vehicle sales in the Indian market are forecast to grow to 69,954 by 2020 from nearly 35,257 units in 2015, with significant volumes added by existing players as well as new entrants such as Genesis, Infiniti, and Lexus. Several factors are expected to contribute to this phenomenal growth. Apart from the emergence of new players, an increased availability of different body styles, expanded local assembly, and increased retail networks will play important roles in this expansion of the market.
IHS Markit expects more luxury brands to enter the Indian market in the next three years. The addition of new players is almost always seen as a challenge to the established ones, especially the leaders. However, in the Indian automotive market it has been proved time and again that to make inroads requires a combination of a retail presence, local manufacturing or assembly operations, and the trust of consumers, which often comes with a brand being present physically on the ground for at least a few years. The luxury segment of the automotive market seems to be following these broad contours, as our forecasts suggest. We forecast that the new entrants - Genesis, Infiniti, and Lexus - will account for a total of just 1,062 sales by 2020, translating into a combined market share of just 1.5% of the premium segment. This is understandable as all three brands will only make their debuts in the coming years.
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