India's luxury car boom

(AFP/TORSTEN SILZ)

Sales of luxury cars produced by German marque Mercedes-Benz surged by 69 percent in India during the first six months of 2010, the automaker said earlier this week.

The figures are a sign of the growing market for luxury car brands in India, where overall passenger sales are expected to grow by 12-13 percent this year by the Society of Indian Automobile Manufacturers.

The luxury market, although only accounting for a tiny proportion of overall sales, is rapidly gaining traction with Indians seeing a rise in income levels, thanks in part to foreign automakers making more vehicles easily accessible in the country.

“We expect India’s premium segment to grow more rapidly than the market as a whole in the coming years,” said Mercedes-Benz's Dr Joachim Schmidt. “Mercedes-Benz aims to have a corresponding share of this growth. The basis for this growth is a large number of attractive products."

BMW, which lost its position as India's number one luxury car maker to Mercedes in January, said that it has seen a 25 percent growth in sales for the first six months of 2010, while Audi saw a rise of 71 percent, although from an admittedly low base of 821 vehicles in the first half of 2009.

The growth of luxury brands poses a challenge to India's domestic automakers, which have grown rapidly thanks to the loyalty of their customers to their small, low-priced products.

Indian firm Tata, which produces the world's cheapest car the Tata Nano, acquired Land Rover and Jaguar from Ford in 2008, enabling it to open the first Jaguar showroom to meet demand for luxury vehicles in 2009.

This week, the firm confirmed that it had beaten analysts' expectations on the back of strong luxury sales in India and overseas.

Maruti Suzuki, known for its small vehicles, also posted strong June 2010 sales vehicles, reporting especially strong sales for its premium SX4 and Dzire models.

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