Ludhiana, Surat enter list of top 10 luxury car markets in India: Report

Ludhiana and Surat have become two of the 10 biggest markets in India for luxury cars. Their rankings have improved to 9 and 10, respectively, from 23 and 17 in 2008, according to a report by Mint.

Delhi remained the largest market for luxury cars in the country, while Mumbai too held on to its second place on the list. But the two cities' overall share in sales fell to nearly 45 percent from around 70 percent earlier.

Anil Sharma, Associate Director at MarketsandMarkets, was quoted as saying luxury car companies already have a strong presence in the metro cities, and have therefore, finished servicing their addressable market there to a large extent.

"Companies must cater to cities with a population of 500,000 and above, as the propensity to spend in smaller commercial centres such as Kota and Kochi increases," Sharma said.

The luxury vehicle segment has faced multiple hurdles over the last few years like a ban on diesel cars with engine displacements of 2 litres or more in the NCR, implementation of goods and services tax (GST), and an increase in duty.

However, sales of luxury cars have grown quickly. Sales of the three leading companies in the segment increased by nearly 20 percent year on year to 33,600 units in 2017.

"Emerging markets in tier-II and tier-III cities have grown rapidly and are showing remarkable growth prospects for the future," Vikram Pawah, President of BMW Group India, said.

Pawah said that the company's customer base has evolved, and that young customers from smaller cities will shape demand for the company's products in the coming years.

Kotak Wealth Management said that households worth more than Rs 25 crore will double in number by 2020. It said in a report that the proportion of individuals surveyed who were below 40 years of age was 60 percent now, compared to 47 percent last year.

"Buying our first luxury car in 2014 completely changed our view towards the segment, which we thought offered nothing special apart from the high price point. The safety and comfort levels and ease of handling were not even close to other mass cars I had driven before," Sagar Agarwal, a 24-year-old businessman from Surat, who recently purchased a Volvo XC40 said.