Luxury cars for the super rich

Considering the number of super luxury cars heading towards India, it is clear that car makers have high expectations from the Indian market

How many in India can afford to buy a set of four wheels that cost more than a crore? Most of us would put the figure in a single digit in each metro. It's actually not worth guessing but considering the number of super luxury cars heading towards India, its clear that car makers have high expectations from the Indian market.

Daimler Chrysler's luxury saloon "Maybach" launched in India a few weeks back is a case in point. Tagged at Rs5.25 crore, it is, by far, the costliest car to come to India. The company is bringing in the car only against bookings. According to the company, the first delivery is expected to be made to a corporate client in the next four months.

Three corporate clients in Mumbai and two in Delhi, are believed to have booked the Maybach, so far. The company says it would take seven months to deliver the "made to order" saloon and expects to sell between 9 and 11 cars annually in India.

Apart from the Daimler Chrysler, BMW, Audi, Porsche and Bentley's offerings are waiting in the wings.

The Bentley Mulliner Arnage Limousine 728, due for debut around July-August this year, along with the bullet-proof version, is also expected to sport a price tag of around Rs 5-6 crore. Also due for an India launch is the luxurious Arnage RL, a 10-inch longer stretch variant of the Arnage which will also debut around July-August and will come with a 20 per cent higher tag than the Arnage R.

Porsche, synonymous with fast sports cars and niche market products, intends to debut in the country in the next 2-6 months. All its cars would be priced over Rs 1 crore. The French car maker has decided to enter the country through the importer-distributor route and is in the process of establishing a retail presence in the Indian car bazaar. Porsche will also be sold against bookings and delivery periods will depend on the choices and trims being ordered by customers, sources in the industry said.

These are not the only cars with a crore plus price tag attached to them. Bentley's Arnage R and the Continental GT Coupe, too, will be priced over a crore.

The Continental GT, expected to cost Rs 1.67 crore in the Indian market, is billed as the world's fastest four-seater coupe and has a twin-turbo 6,000-cc 552-bhp engine which can bring the car to a top speed of 198 miles per hour. The Continental will be available for the Indian market as soon as it completes homologation in the summer of 2004. The company expects to sell around 40-50 Continental GTs by 2005.

German luxury car BMW is also finalising plans for an India debut. The car maker has sent its 7-Series car 745 to the Automotive Research Association of India (ARAI) for a final approval for launch. The company is bringing in the entry-level 3-Series model, the 318I, for which it has received the nod from the ARAI. The 745 will carry a price tag of around Rs 70 lakh while the 318i would be available at a comparatively reasonable Rs 20 lakh plus.

While BMW intends to debut in India through the direct-import route and is in the process of establishing a retail presence in the market, officials said BMW is also actively pursuing plans to set up an assembly base in the country. As a first step, the firm will establish a sales subsidiary in India. Officials from the company are believed to be scouting for a location to set up a manufacturing base. The states which are under purview are Andhra Pradesh, Karnataka and Chennai. BMW's assembly unit is expected to be a separate venture and the company is in talks with existing manufacturers to either lease out their spare capacity or set up a joint venture.

BMW initially planned to enter India in a joint venture with the Hero group to produce its 3 and 5 series range of luxury cars. However, the proposal was rejected by the Indian government as the German major was not willing to invest the minimum prescribed amount of $50 million under the government's MoU norms. BMW was willing to invest only $35 million.

BMW had also set up a separate venture with a Hero group company to assemble and sell high-end bikes in India priced at about Rs 4.50 lakh. However, poor sales forced the company to ultimately abandon the project. Audi, part of the Volswagen group is planning to bring in its top models into India five years after it canceled its plans to enter India along with sister concern, Skoda. Audi's offerings are comparatively lower-priced, with no plans to introduce anything in the crore plus range in India.

Audi is bringimg in the Rs 35 lakh two-door TT Coupe. As was planned before, the company will look at exploiting back-end synergies with Skoda India, which has a manufacturing facility in Aurangabad, Maharashtra that produces Octavia.

Initially Audi will import the 1.8-litre turbo-engine TT Coupe as a completely-built-unit (CBU) and market it through select dealers in Delhi, Mumbai and Bangalore. After gauging the response to the vehicle in the country Audi will decide whether to assemble cars in the country.

Audi also plans to launch its new models A6 and the A4 model in India later this year. These will be priced between Rs 35 lakh to Rs 50 lakh. The A6 is part of a new series, since globally, the earlier version of A6 is nearing the end of its life cycle and the one launched in India at the end of this year will be a new model.

Audi competes with sporting brands like the Spanish Seat and Lamborghini in global markets. The Asia-Pacific region is the fastest-growing market for Audi. In 2002, the company's sales in the region grew by 27 per cent to 55,900 units. In the first half of 2003, it grew 56 per cent (39,500 units) year-on-year.

Since all the automakers are bringing in their products as completely builtup units (CBUs), the cars will be available in India at approximately double their prices in international markets. It is anyone's guess as to the size of the market that can support such prices.

Most of these auto companies have clearly stated that the cars will be delivered on a bookings basis and that there will be a waiting period between order and delivery. Even internationally, the Continental GT has a substantial waiting period..

If nothing else, these super luxury cars act as image boosters for the companies. For Daimler Chrysler, Maybach is an image enhancer especially when consumers will soon witness luxury cars from BMW, Bentley and Porsche, Daimler needs a product that will maintain its exclusivity.

European car makers have been encouraged by the success of Daimler's Mercedes E Class and S Class to venture into a hitherto untried and untested Indian market. This is also why BMW and Audi are planning assembly lines here.

Setting up auto manufacturing operations is no mean task and a gamble that few would be willing to take. The success or failure of the newcomers will decide the shape of things to come.