Indians in the lap of
luxury By Siddharth Srivastava
NEW DELHI - Global luxury products and top
fashion labels are looking to tap the growing
Indian market. Indeed, India is a market of
contrasts.
Car makers are looking to
produce the world's cheapest car, valued at
US$2,500, to cater to the Indian mass market,
where many travel in bullock carts. They are also
looking to sell luxury four-wheelers priced over
$1 million.
The size of the luxury market
in India is estimated to be about $4
billion, and is expected to
rise to $30 billion by 2015, which would include
luxury assets such as private jets and luxury
homes, cars or yachts and art.
The
luxury-car segment, broadly defined as vehicles
worth more than Rs2.5 million ($63,000), should
clock sales of more than 4,000 units this year, a
30% rise over the previous year.
Fashion
labels such as French Connection (FCUK), Tommy
Hilfiger and Calvin Klein (CK) have already
marked-their India presence, while others such as
Gucci, Jimmy Choo and La Perla have blueprints
ready.
Luxury brands already in India
include Hugo Boss, Chanel, Louis Vuitton, Versace,
Salvatore Ferragamo, Bvlgari, Christian Dior,
Cartier, Piaget, Tiffany, Moschino, Tag Heuer, and
Dolce & Gabbana.
FCUK and CK outlets
have been reporting brisk business in the past two
months in Delhi. High-heel Jimmy Choo outlets will
open at Mumbai and Delhi in the next six months
and so will luxury lingerie and apparel label La
Perla. Gucci opened its signature store in Mumbai
this month and the next one is going to be in
Delhi very soon.
All these big brands
intend to spread to other major cities such as
Hyderabad, Bangalore, Chennai, and target rich
populations in cities such as Ludhiana, Chandigarh
and Pune.
"India's fascination for luxury
is only growing, beyond the traditional
expenditures on home, education and marriage. The
response so far has been tremendous," said a
spokesman of the Murjani Group, which brought
Italy's Gucci, rated as the world's most desirable
and best-selling luxury brand, to India.
A
recent Technopak report estimates that there are
1.6 million households in India with a disposable
income of at least Rs400,000 per year, enough to
splurge on expensive items and services.
It is estimated that there are more than
100,000 high-net-worth individuals with liquid
assets of more than $1 million. The total wealth
of this section is predicted to touch $500 billion
by 2010, according to a survey by Merrill Lynch.
Close to 2 million Indian households are
estimated to earn more than $100,000 a year. This
number is expected to rise above 5 million or even
7 million in the near future, fed on export
incomes, rising stocks and real estate.
According to a survey by market research
firm ACNielsen for the Tax Free World Association,
Indians traveling abroad on average spent $903
individually in 2006 and collectively a huge $7.5
billion, buying confectionery, perfumes, fashion
accessories and alcohol.
The Boston
Consulting Group has said that India has emerged
as the fastest-growing wealth creator in the
world.
Over the past five years, the
number of millionaires being churned out of India
is growing in excess of 15% each year. There are
36 Indian billionaires, with numbers also
expanding quickly.
Given such growth
figures, high-end luxury cars such as Rolls-Royce,
Porsche, Lamborghini, Aston Martin, Ferrari,
Jaguar, Mercedes-Benz, Maybach and BMW are beating
sales targets in India.
This year, luxury
car maker Bentley announced plans to roll out its
latest models, including the limited-edition
Brooklands coupe as well as the Azure, in India.
These models are priced in the range of $700,000
to $1 million in India, given the duties and other
taxes. The Brooklands is a four-seater coupe
powered by a 6.75-liter twin-turbocharged V8
engine. In three and half years, since it began
its Indian sojourn, Bentley has managed to sell 70
cars, each worth in excess of $250,000. But this
is the first time it has rolled out the top-end
models.
Another luxury car maker bullish
about India is German sports-car major Porsche,
which is looking at a threefold increase in sales
within the next three years. The company sold 160
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 sport-utility vehicle in
India at a price range of $125,000-$250,000.
Porsche has now formally set up a
subsidiary in India. Porsche sells various models,
including the Boxster, Carrera 911 and Cayman. It
plans to launch the Panamera sedan globally,
including in India, in 2009.
The
multi-purpose Hummer vehicle will soon roll in
India, renamed the Mahindra Axe. Indian auto major
Mahindra & Mahindra is leading the India
Hummer soiree that will be available for both
military and civilian use.
The indigenous
Hummer is likely to be priced from $50,000 up to
$150,000 for specialty models. General Motors,
which markets the brand, is also looking to sell
its legendary Cadillacs in India. Selling the two
high-end brands will boost "our corporate image"
and "widen our product portfolio in the country",
said a GM spokesman.
ECA International,
the world's biggest organization for
human-resource professionals, has said that
"Indian workers are set to receive the highest
raise, with firms forecasting annual salary hikes
of 12%, resulting in a real wage increase of 7%
once inflation has been taken into consideration".
India is the most acquisitive of emerging
nations as the global reach of Indian businesses
in the recent past has resulted in the takeover of
several big Western and other companies, a new
study by KPMG has said.
Of the four major
emerging economies, Brazil, Russia, India and
China, India clocked the highest number of mergers
and acquisitions during the first half of 2007,
according to KPMG.
Ian Gomes, chairman of
KPMG's new and emerging markets practice, said in
a statement: "The large volume of outbound deals
is indicative of the current mindset of many
Indian companies: grow, acquire, and utilize debt
facilities to the full."
The household
income survey from the National Council of Applied
Economic Research estimates that the number of
families with annual incomes of more than $250,000
(Rs10 million) doubled from 20,000 in 2001-02 to
53,000 by the end of 2005 and will grow to 140,000
by 2010.
Siddharth Srivastava is
a New Delhi-based journalist.
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