By Chris Powers
The economic slowdown that’s affected most of the world doesn’t seem to be a threat to Indian luxury shoppers.
The auto industry as a whole isn’t pulling impressive numbers in this region of the world, and it has, in fact, been declining. But the luxury-cars sector seems to be in a class of its own.
Mercedes recently saw 125 of its S-Class luxury cars fly off the lots within 16 days of the launch in India — and these rides go for $250,000 each. That’s impressive.
It seems that the rich keep getting richer, unaffected by the harsh economic times. So, while sales figures for regular, passenger cars are expected to drop by 10 percent this year, the luxury-auto industry is expected to experience a 15-percent increase, even with import taxes as high as they are.
It’s like this in many countries, especially in Latin America. In Panama — considered the Hub of the Americas, and a business mecca for Central America — the wealthy drive away in brand-new Porches and Jaguars, while the majority of the population is buying used cars from family members.
In one mall, it’s common to see high-end retailers such as Louis Vuitton, Tiffany & Co., Cartier, and Bvlgari; meanwhile, right down the street, struggling local venders are selling handmade scarfs at a dollar apiece.
So what’s keeping these upscale companies afloat in these markets?
In India, a country that was ranked as having 33 percent of the world’s poorest residents by the World Bank, those at the highest income level don’t seem to be sweating the rough economic times. And, even with a high percentage of people in the lower income bracket, India has plenty of millionaires, and quite a few billionaires.
Most of the money seems to be coming from business executives; modest farmers who’ve recently hit it big with the sale of land to major developers; and the nation’s youth, who have inherited riches from their parents.
With India experiencing only half the rate of economic growth it saw in its better years, those with money seem to be able to keep it, and they’re more than willing to shell out the big bucks for high-end items. It’s common to see luxury cars making their way around town. Names like BMW, Mercedes, Jaguar, and Audi are big in cities like Delhi and Mumbai. The luxury-car market in India isn’t very big, but it’s definitely booming.
And it’s not only the luxury-car market that is doing this well in India. This is an area of the world where gift giving is a major part of the culture. And what better way to show off your wealth than to buy a friend, business partner, or family member luxury goods? This has been one of the driving forces behind the industry’s ability to thrive during the country’s economic ups and downs.
Plus, with members of high-society holding frequent social gatherings, luxury goods will always be popular. Who’s wants to show up at the boss’s party, or a business partner’s shindig, without the hottest new dress, the most elegant designer suit, some serious bling, and a luxury ride? Not India’s elite, that’s for sure.
As long as these big spenders are willing to keep spending big, India’s luxury market will be doing just fine.