A car worth a million dollars in
India By Siddharth Srivastava
NEW DELHI - As spending power increases in
India, producers of luxury vehicles are keenly
eyeing India's burgeoning market. Two such brands,
the Volkswagen group company Bentley and German
sports car maker Porsche, have zeroed in on the
South Asian country.
And in what may seem
like an odd exchange, last week the Indian
government agreed to soon allow iconic American
Harley Davidson luxury motorbikes to roar down
Indian roads, in
exchange for allowing Indian
mangoes to be sold in US supermarkets.
Luxury car maker Bentley has announced
plans to roll out its latest models, including its
recently launched limited edition Brooklands
coupe, as well as the Azure. The company has also
announced its intention to enter the second-hand
car market.
In India, Brooklands and Azure
are priced, including duties and taxes, in the
range of US$700,000 to $1 million.
Since
it rolled into India three-and-half years ago,
Bentley has managed to sell 70 cars, each for a
price in excess of $250,000. But this is the first
time it has rolled out its top-end models.
Bentley already sells its Arnage,
Continental and Flying Spur models in India and it
is scheduled to launch its new GT Convertible
model early next month. They plan to make only
five units of the car, priced at $500,000.
Bentley intends to manufacture only 550
Brooklands and 700 Azures globally, so India is
likely to be allocated only two of each.
Bentley, which sells cars in different
countries through limited allocations, this year
has earmarked 25 units for India, marginally less
than the 28 it sold last year.
Ian
Gorsuch, regional director of Bentley Motors,
said: "India has exceeded our expectations and the
customer base is constantly growing. With the
company limiting its production globally to
maintain exclusivity, we are looking at the used
car business as a serious model to satisfy
customers."
Another luxury car maker that
is enthusiastic about India is German sports car
major Porsche, which is looking at a three-fold
increase in sales within the next three years.
"India is at the beginning of the
development of a luxury automotive market as there
has been an increased awareness and availability
of top-end brands, which we think should drive up
our sales," said Porsche India Center managing
director Mohamed Rahman.
The company sold
160 units of its luxury vehicles in India last
year and is confident of taking the number to
about 550 by 2010. Recently, Porsche introduced
its second-generation Cayenne sports utility
vehicle in India at a price range of $125,000 to
$250,000.
Porsche has now formally set up
a subsidiary in India, selling various models,
including the Boxster, Carrera 911 and the Cayman.
It plans to launch the Panamera sedan globally in
2009.
Riding on high domestic and
international demand, this year has been one of
the best for the Indian automobile industry. An
Indian government mission plan said auto
manufacturers are aiming for sales of $145 billion
in 10 years or an average 16% annual growth, up
from about $40 billion now.
The
Harley-mango quid pro quo has been worked
out between Indian and US official
representatives, with New Delhi willing to ease
emission standards that will allow the motorcycles
to be imported to India.
Washington, in
turn, has relaxed the non-trade barriers that have
so far prevented Indian mangoes from reaching
American supermarkets, despite negotiations
spanning two decades.
"We will soon issue
a notification on the import of this premium
bike," Commerce and Industry Minister Kamal Nath
said immediately after co-chairing a meeting of
the India-US Trade Policy Forum along with US
Trade Representative Susan Schwab. High-end
bikes such as Harleys enjoy more lenient emission
standards in North America and Europe, as they are
categorized as highway bikes rather than normal
city bikes. This had become a sticking point that
had prevented the bikes from being brought to
India.
Apart from agreeing to Euro-III
emission norms, the government has eliminated
mandatory checks for these bikes. Instead, a test
certificate from an accredited agency will now be
enough.
The move will also open the
floodgates for Japanese bike makers like Yamaha,
Honda, Suzuki, and Kawasaki, who should now be
able to bring their motorcycles to India.
The indicators for motorbikes in India are
good. Rising incomes and easy access to loans have
helped drive a vehicle boom in India, the world's
largest market for motorbikes after China. Over 6
million motorcycles are sold in India every year.
With over 1.6 million Indian households
earning more than $100,000 a year and 36 listed
billionaires, the Indian luxury market is taking
off.
With the easing of foreign investment
norms for luxury single-brand retailers, over 25
brands have submitted proposals to enter the
country, while more than 100 brands are estimated
to have chalked out their India entry and
expansion plans.
Heavyweights include
Louis Vuitton, Hermes, Gucci, Jean Paul Gaultier,
Chanel, Ferragamo and Tommy Hilfiger. Louis
Vuitton has already seen about 50% year-on-year
growth in sales in India. Indeed, the brands
have reason to be upbeat. Benefiting from a
high-growth services sector, a big segment of
Indian society is enjoying increased spending
power.
According to a survey by market
research firm AC Nielsen for the Tax Free World
Association, Indians traveling abroad on an
average spent $903 each in 2006 and collectively a
huge $7.5 billion, buying confectionery, perfumes,
fashion accessories and alcohol. Every year,
Indians spend 28% more than in the previous year.
About 8.3 million Indians traveled abroad
last year, either on business or for leisure. The
world's biggest spenders are Japanese. Chinese
people currently spend $100 more per person than
Indians.
This is the fourth straight year
that salaries in India are projected to rise
faster than any other major Asian country, due to
a severe manpower crunch.
According to an
annual study carried out by human resources
consulting firm Hewitt Associates, India will
continue to be the highest salary growth region in
the Asia-Pacific, with an all-time high average
pay hike of 14.5% in 2007 against 14.4% in 2006,
14.1% in 2005 and 13.7% in 2004.
Driven by
growth in sectors like software, business and
management consultancy, exports of services in
India may surpass exports of goods by 2012,
according to a survey released by the Indian
Federation of Indian Chambers of Commerce and
Industry.
A recent survey by AT Kearney
said that an unassailable combination of favorable
factors has catapulted India to the top among
global destinations for offshoring services.
Siddharth
Srivastavais a New Delhi-based
journalist.
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2007 Asia Times Online Ltd. All rights reserved.
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