By Debbie Holden 29 Jan 2013 6 min read

India’s luxury car market sees 40% year-on-year growth

The luxury car market in India is expanding at an annual rate of 40%, according to the latest industry figures. The potential for growth in India is enormous, and could mean that manufacturing jobs in India will boom in the coming years. There could be opportunities for UK auto manufacturing expertise to set up production in the country.

While the wider car market in India has slowed right down in recent months, luxury car manufacturers are keen to invest in manufacturing in the booming country so they can sell to the new wealthy elite – Indian farmers and industrialists who are proving to be big fans of top of the range Audis, Jaguars and Mercedes cars.

Mercedes-Benz was the first to enter the Indian market, and during 2012 it sold 7,138 cars there, compared with 206,150 units in China. It says the Indian market is now as big as the German market for luxury motors.

Audi Indian Film stars

Star appeal is selling cars
A Confederation of Indian Industry-AT Kearney report, shows that India’s luxury market was worth $5.8bn (£3.7bn) in 2011 and is expected to treble by 2015.

Star appeal is helping sell cars. Bollywood’s big names are associating themselves with luxury car brands – and this is helping drive interest among young, wealthy Indians. For instance Audi has already used India’s big-name movie stars to sell its cars.

At the start of 2013 Bollywood actors Saif Ali Khan, Deepika Padukone and Ameesha Patel graced the launch of new Audi R8 at the Delhi showroom. The trio was there promoting their new movie, Race 2, which, features a range of Audi cars in its action sequences.

However, luxury carmakers face high taxation, The Indian government levies a tax of more than 100% on imported luxury cars, pushing up their cost substantially.

Jaguar and Land Rover making inroads

So increasingly, car makers are making investments to assemble some units within India in an attempt to reduce the taxes as there is only a 10% tax on import of automobile parts.

Tata Motors, which now owns the British luxury brands Jaguar and Land Rover, is assembling the Jaguar XF in Pune in central India – reducing the price tag by over $20,000.

Meanwhile market leader BMW, which sold more than 9,300 units by the end of 2012, is also planning to launch the new BMW 1 Series from its Chennai plant.

Sharp marketing and an understanding of the finance needs of younger buyers has certainly helped Audi win customers in India. The company saw its sales jump 63% last year. It’s certainly a market to watch in the next few years.