The Indian buyer is going premium, and how. Sales of vehicles costing upwards of Rs 10 lakh climbed to a record 41% of total volumes that were sold in 2022. This a significant jump from 2018 when the 5.4 lakh cars sold in this price bracket accounted for 16% of the pie. Now, the volume of premium cars is estimated at 15.5 lakh units when industry sales are pegged at around 38 lakh units.
All this while the bottom end of the market, comprising entry-level models such as the Maruti Alto and the Renault Kwid, shrank as inflation and rising interest rates kept first-time buyers away. In fact, many buyers have opted for an aspirational buy, preferring a more feature-loaded second-hand vehicle instead of a new entry-level brand.
The share of entry-level small vehicles has shrunk from 11.7% (3.9 lakh units) of industry sales in 2018 to 6.8% in 2022 (1.4 lakh vehicles).
So, which are the premium cars that are being lapped up by the market? A majority of these are SUVs such as the Mahindra Scorpio-N and XUV700, Tata Harrier, Hyundai Creta and Tucson, Kia Seltos, MG Hector, Toyota Fortuner and Innova, Skoda Octavia (sedan), apart from the luxury ones from companies such as Audi and Mercedes-Benz.
No demand fatigue in premium-car market
The demand in the premium end of the market is not displaying any signs of fatigue, as consumers queue up for new launches, resulting in a long wait and the vehicles being sold over the market cost by some dealers to make illegal gains.
Even luxury electrics are finding an equally strong traction, as can be seen from the good demand for vehicles such as Kia EV6 and Mercedes EQS.
Companies such as Maruti, known as the ‘people’s carmaker’ due to the value-for-money vehicle line-up, are recognising the trend and are looking to enter the premium club, says Shashank Srivastava, director of sales and marketing at the company.
With not much traction in its bread-and-butter ‘practical cars’ portfolio, the company is now gunning for premium customers with products such as the Grand Vitara (developed in partnership with Toyota) and the soon-to-be-launched Jimny (competitor to Mahindra Thar).
Tarun Garg, director (sales and marketing) at Hyundai India, said that “aspirational has replaced functional” as a relatively younger car buying population hits the market. “The new customers are looking at the higher trim. People today want design, connectivity, safety and a lot of frills,” he said.
For Hyundai, the share of cars priced upwards of Rs 10 lakh now stands at 45%, higher than the industry average.