Automobile maker Maruti Suzuki India Ltd has been running a television commercial highlighting the efficient fuel consumption of its vehicles. The clever ad shows a suave salesman hard selling the grand features of the luxury yacht to an obviously prosperous man. True to a country “obsessed with mileage”, the potential buyer asks the bewildered seller: “Kitna deti hai?” (What is its mileage?)
The humour may be lost on Maruti Suzuki’s rivals, but the idea probably warms Nigel A. Harwood’s heart. For Harwood, the president and CEO of InterGlobe Established Products Pvt. Ltd, the company that sells a range of yachts, jets, super premium cars and bikes, is witness to Indian customers’ obsession with deriving maximum value for money.
Indians are the best negotiators in the world, he says, quickly adding that it is not a bad thing. It is common for him to receive text messages from clients requesting discounts on products that come with price tags of $4 million to $80 million.
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In the last four-and-a-half years, Harwood claims he’s sold nearly 40 private jets under InterGlobe General Aviation and got glimpses of the Indian consumer psyche. The Indian consumer is not just looking for discounts, he is a stickler for quality and impatient with delivery. The product ordered today must be delivered day before yesterday!
However, the potential of the Indian market where he sees “wealth expanding” drove the company three months ago to change its name and to create a portfolio of luxury lifestyle products for the sea, the sky and the road. So under “The Established” brand name it now offers Hollister’s motorcycles, Koenigsegg cars and Messerschmitt and Novatec yachts, among other things.
In India, the yacht and boat market, though still very new, is growing, according to companies that sell a host of marine brands here. At one end of the spectrum, for instance, are consumers in Mumbai looking for simple boats to reach their beach houses in Alibaug over the weekend. Instead of buying a Rs 15 lakh car, they opt for a boat for convenience, explains Malav Shroff, chief executive officer and managing director of Ocean Blue Boating Pvt. Ltd who organized the international boat show in the city last year.
However, there are yet others who do not mind spending Rs 4 crore for an entry level yacht. And these may be successful first generation entrepreneurs. The sellers cannot ignore the increasing queries from highly paid professionals either. Almost all dealers in marine products concur that lawyers are emerging as a significant category of buyers. (Even Cherian Mathew of Cochin-based Nautilus Yachts claims receiving queries from lawyers. “Although we have not sold any,” he clarifies.)
Clearly the profile of consumers for such luxury products is changing. While large business conglomerates continue to buy executive jets, the young blood is looking for style and thrill. Anju Datta of Marine Solutions who markets Ferretti in India explains why the category is attracting younger buyers: the younger generation works hard but also believes in work-life balance. So private time with family and friends is critical and they don’t mind spending. What also helps is the equated monthly instalment option.
Harwood, on the other hand, is receiving queries on his ultra luxe cars. It is best to receive a father-son duo as you may end up selling two products. A hand-built Jaguar for dad and a bike for the son.
While the interest in boats and yachts may be growing, the purely marine products companies face a major challenge: parking infrastructure and marinas, or the lack of these, which is restricting the growth in the category. There is simply no place for the buyers to park their boats even though the demand from coastal towns is growing.
If India sets its marinas in place, the marine products business is set to go the car market way, feels Anju Datta. Currently, Cochin is the only town with a marina. Work is supposed to start in Goa and Mumbai. In fact several other projects are stuck for lack of a clear policy on the matter. Companies engaged in building marinas say the projects are stalled as there is no single agency that gives them a no-objection certificate required to start work.
It was a good year for these companies and business was beginning to pick up. But now buyers may retract for reasons other than poor infrastructure. The threat of an impending slowdown in the economy that is being forecast is likely to affect leisure product sales. Surprisingly, the companies in the business are remarkably calm on the issue. Of course any economic downturn affects sales, Harwood says. That said, it only delays a purchase, it generally does not cancel it, he adds.
Shroff’s argument is that slowdown for such a small industry is relative. “If we were growing at 200%, we will grow at 100%,” he concludes.
Shuchi Bansal is marketing and media editor with Mint. Comment at email@example.com