At a time when auto makers are struggling to sell passenger vehicles in the world’s fifth and Asia’s third biggest car market and reported decline, the luxury car brands such as Swedish Volvo and German BMW have bucked the trend recording double digit growth albeit on lower base last calendar year.
Driven by new product range such as XC40 and XC60 sport utility vehicles, the Indian arm of the Swedish brand famous for its safety has in fact emerged as the fastest growing brand in India.
Volvo sold a total of 2,638 new cars in 2018, indicating the brand’s growing penetration in the Indian market. The company had sold 2,029 units in 2017, Volvo Cars India said on Thursday in a statement.
On the other hand, BMW, the second biggest German luxury car maker by sales in the country, on Thursday also said its BMW and Mini brands together registered robust sales at 13 per cent growth compared to last year.
While BMW and Mini brands together sold 11,105 cars in 2018, clocking 13 per cent growth compared to 2017, the BMW brand achieved highest ever sales of 10,405 units clocking 11 per cent growth. It has sold 9,800 units in the previous year.
MINI brand accelerated with unprecedented growth of 66 per cent with 700 units last calendar year on low base in 2017.
Auto analysts said passenger vehicle sales in India ended year on muted note on various factors, including overall cost of ownership, higher rate of interest on finance weighed on buyer sentiments.
Passenger vehicles were down by 3.4 per cent in November over last year, a fourth monthly decline since July, the Society of Indian Automobile Manufacturers said last month.
“While passenger vehicles sales were on a healthy growth track in the last three years, the luxury car market in India was stagnant during the same period,” Subrata Ray, senior group vice president at ICRA Research told Financial Chronicle.
For instance, the total luxury car market sold about 36,000 units in 2015, about 33,000 units in 2016 and about 37,000 units in 2017, he pointed out.
“We need to wait for present market leader Mercedes Benz, Audi and Jaguar Land Rover to declare their sales data for the year to arrive at a meaningful trend,” Ray said.
He said the higher sales figures of Volvo and BMW were on lower base of the previous year and also the volumes were small, he said.
“In 2015, it was predicted that the growing luxury car market in India would see 10-30 per cent growth over the next three years in the country but it did not happen,” Ray pointed out.
However, he said the luxury car market had the potential to expand provided more models were locally assembled and prices were rationalised to push up volumes.
In fact, India is an important market for the luxury car brands as the rapidly expanding Indian market is poised to emerge as the third important car mart over the next three years from the present fifth globally.
According to analysts although the luxury automotive market has been lukewarm, Volvo and BMW brands were able to pull ahead with their new product launches and dealer expansion.
Volvo cars from its Scalable Product Architecture (SPA) and Compact Modular Architecture (CMA) platforms have gained momentum in the market with healthy sales contributions coming from the popular XC60, XC40, XC90 and S90 models.
Volvo assembles the XC60, XC90 and S90 locally in India while the XC40 is sold as an imported SUV.
“The year 2018 has been a fantastic year for Volvo Car India as we ended the year with yet another record,” Charles Frump, managing director at Volvo Cars India said.
He said Volvo is on a roll in the fiercely competitive luxury car market led by German troika such as the market leader German Mercedes-Benz, BMW and Audi.
“I am very positive about the performance of our brand in this market,” he boasted.
Frump also said he was confident that 2019 would be a great year for Volvo Car India when it will turn its focus on company and dealer profitability.
For the German brand BMW 5 Series and BMW 6 Series Gran Turismo contributed strongly to the growth story, the company said in a statement.