Despite strong marketing, impressive brand value and an interesting product line up, luxury car sales in India have slumped with a mere 5% increase in sales in 2018. Market volatility, increased upfront insurance costs and liquidity crunch are few of the major concerns which have forced customers to delay their big-ticket purchases such as a luxury car. This despite a slew of year-end schemes and discounts being offered to attract new customers.

A crucial factor for the lacklustre year has been India’s policy push against Diesel Cars. In a highly price sensitive country like India where car mileage plays a very important role, even in the luxury car industry, diesel cars have lost favour with customers. The enhanced price of diesel cars, policy push towards EV cars, negligible price difference in the diesel and petrol costs and the 10 year period maximum validity for diesel cars have slowed sales tremendously. Add to the fact that as the Industry moves towards Electric vehicles, automobile makers are investing in R&D towards Electric cars due to which new diesel model launches have stalled. The Volkswagen group which owns Audi and Skoda is already facing heat worldwide for Dieselgate and has hence stayed away from launching any new diesel models. In the case of JLR, a tata group owned luxury automobile brand, has recently announced layoff of more than 4500 employees worldwide due to the slump in car sales. This comes after the 1500 laid off last year. The company claims uncertainty due to Brexit, diesel car sales slump and a sales slowdown in China as the primary reasons for the strategic decision. The company claims it is making investments to adjust future product lines and that it is going to focus on electric cars production.

Policy Push: Move to the future

With the government’s push toward electric mobility and the introduction of Bharat Stage VI fuel standards, carmakers in India are focusing on creating platforms that would support electric, hybrid and other future tech-enabled cars. At least half a dozen zero-emission cars, hydrogen cars and pure electric cars have been scheduled for launch as early as 2019 in India.

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Audi E-tron, Nissan Leaf, BMW iSeries cars and even Lamborghini’s Terzo Millennio may soon be launched in India. Although, most car companies have stayed quiet about the launch timelines in India. Volvo plans to launch four plug-in hybrids in India. With changes in import regulations, once a car is certified in the home country, it no longer needs homologation in India. A move welcomed by the automobile industry as it would be a cost saving, running into crores, for each model that is introduced in India. Mercedes plans to introduce more than ten electric models in India over the next three to four years. Rival Audi plans to introduce more than a dozen by 2025. The change in the import regulations will allow for a simultaneous launch of the luxury cars with their global launch.

In a bid to reduce costs for electric vehicles, the government has drastically reduced the import duty on parts and components of electric vehicles to 10 to 15 percent. However, the exemption of customs duty on battery packs for electric vehicles has been eliminated and the customs duty on battery packs for mobile phones has been doubled. A move aimed at promoting ‘Make in India’ which would push manufacturers to set up facilities in India. Elsewhere, Niti Aayog’s plan to apply a cess on conventional fossil fuel based vehicles to promote subsidies on electric cars. This would further increase the cost of luxury cars in India since most cost upwards of Rs 30 lakhs.

On a more positive note, various international startups have plans to launch luxury electric cars in India such as the London-based enterprise, Laureti, which plans to launch its e-SUV,  Dion-X by 2021. And in comparison to Audi’s yet to be launched E-Tron with a sticker price of Rs 1 Crore, Dion-X will cost approximately Rs 40 lakhs and claims a mileage of 540 KMs per charge.

With electric being the way forward, luxury car makers are leading the way to the future. Indian government’s policy push to promote e-mobility is highly exciting. As the world’s second largest automobile market after China, exciting times lie ahead for the fans of electric mobility and Luxury cars. 2019 onwards, we believe, we will see a flurry of car launches to entice the Indian luxury car aficionados.

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