Luxury car sales zoom 168% in June, shift towards niche products driving demand

| Updated: July 21, 2021 1:38 pm

In the pandemic year of 2020-21, overall sales of automobiles were severely affected due to lockdown, restrictions on the opening of showrooms, and lack of demand. However, with the unlock, the demand seems to be coming back on track. However, the biggest surprise is the pick-up in hind-end or premium vehicles.

After declining by half in the financial year 2020-21, demand is coming back in the luxury car segment. June vehicle sales data, released by the Federation of Automobile Dealers Association (FADA), indicates that luxury car sales in the country have bounced back by 168 percent compared to May.

After demand going by almost half, luxury car sales are bouncing back towards normalcy in the first quarter of 2021-22. June sales, for almost all brands, have increased compared to May.

Car sales are accelerating because of preference towards personal mobility over public transport. However, monthly figures from June 2020 onward show an upward trend in demand. “Social distancing norms, restrictions on passengers in a public transport has triggered a shift in preference for a personal vehicle, A bit of pent-up demand (return on consumer buying after a period) also helped the vehicle sales,” Madan Sabnavis, chief economist with Care Ratings said.

Other reasons such as preference, taste, and moving towards niche segments are also driving the sales growth. “If you look at the sales data every month, you will see growth is higher in brands or cars that have rolled out new models. Not only premium car brands like Mercedes Benz, Audi, or BMW but high-end models of middle segment is witnessing similar trend,” Vinkesh Gulati, national president, FADA said.

Other than new product launches offering features, there is also a visible shift in the consumer mindset. “There is a shift towards a car that offering niche features. Even in an entry-level hatchback, compared to a basic model, top variants are in demand. This applies to all cars – whether you differentiate in terms of entry-level, premium, or luxury,” Gulati adds.

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