The surge in used car prices is partly driven by the global chip shortage that has hit production
NEW DELHI :
At a time runaway inflation crimps the purchasing power of most Indians, luxury brands are doing surprisingly well in India, seemingly driven by fewer spending options, pent-up demand and the ‘you only live once’ spirit from the pandemic era.
For instance, a Mumbai buyer snapped up a used Audi SUV coupe RS Q8 from the city’s Big Boy Toyz showroom that deals in second-hand luxury for ₹2.2 crore, just a shade below the ₹2.5 crore that a new model costs. The car had clocked about 1,000km.
While the surge in used car prices is partly driven by the global chip shortage that has hit production, the willingness of buyers to spend huge sums on luxury products, even if they are used cars, shows wealthy Indians no longer want to wait out the pandemic.
“Even till last year, this car would not have sold for more than ₹1.99 crore. But people are no longer willing to wait for extended delivery times of 8-9 months; so they opt for even second-hand luxury cars at high prices. As a result, demand for our cars has gone up by 25% since 2021," said Jatin Ahuja, founder and managing director of Big Boy Toyz.
The super-luxury segment in India is witnessing demand moving close to the pre-covid era.“Lamborghini had a record year in 2021 in India. Our volumes grew 86% in 2021 (33% over 2019), delivering 69 cars in India," said Sharad Agarwal, head of Lamborghini India.
Lexus is looking at reaching its 2019 sales figures by the end of this fiscal, said Naveen Soni, president of Lexus India. “People’s propensity to spend is going up post-pandemic, and they are willing to spend and ‘You Only Live Once’ is really helping push up demand," Soni said.
Other luxury goods, such as watches and jewellery, are seeing a promising recovery in 2022 from their lows in 2020. For example, watch brand Ulysse Nardin said that at the end of 2021, its sales in India exceeded those of 2019.
“2022 has started very strong in terms of demand, to the point that we can no longer meet it with our current watch production," said Teresa Garin, general manager for the Middle East and India for Ulysse Nardin. “So we have experienced a very quick recovery after the pandemic. We are also experiencing a great sell-out at airports, back to the levels of 2019 and before," she said.
The Collective, which sells luxury clothing and accessories, is also seeing strong growth. Amit Pande, brand head, The Collective & International Brands at Madura Fashion and Lifestyle, said the brand has doubled its business from last year and is getting close to its 2019 numbers. To tap into this growth, it plans to launch several new brands, including one each in the shoes, women and men’s apparel categories under The Collective portfolio. The company retails brands such as Emporio Armani, Hackett London, and Versace Jeans Couture.
Luxury sales have been steady despite international travel opening up, said Pushpa Bector, executive director at DLF Retail, which runs Emporio luxury mall in Delhi. “Overall, luxury watches are still very much in demand, but since the supply isn’t there, the demand does look exceptionally high. But both luxury watches and jewellery are doing well. DLF Emporio now has 11-12 jewellery brands—both international and Indian," she said. “With millennials preferring branded jewellery, the category will be interesting to watch. We also believe there is renewed interest in new luxury brands wanting to enter India," she added.
Anul Sareen, who works as a consultant for beauty and fashion at Euromonitor International said luxury goods have been seeing good recovery since the second half of 2021. While the segment hasn’t recovered to the pre-COVID 2019 gross sales numbers because of lockdowns in 2020 and the first half of 2021, the industry would experience a full restoration to 2019 gross sales numbers by 2024.
Also, there is a rise in easy access to luxury merchandise due to aggressive digitalization initiatives in the country. Several e-commerce platforms such as Tata CLiQ and Ajio during the past two years entered the luxury segment by developing dedicated online platforms catering to consumers seeking luxury merchandise. The nationwide presence of these players allowed luxury products to be accessed by consumers in tier II/III cities as well, which wasn’t the case previously as all luxury brands have earlier focused solely on having a presence in tier I cities with physical stores in upscale shopping malls, he said.