Image courtesy: Reuters
Indian consumers are continuing to show strong appetite for luxury products even as consumption in the rest of the economy slows down due to inflation and sliding growth prospects.
From cars to accessories to high-priced homes, luxury items are flying off the shelves thanks to the country's growing breed of super rich. Luxury sports car maker Porsche sold 215 cars in India in the quarter ended June, 57% more than the 137 units it sold in the same period last year.
Ducati says it will sell 300 bikes in 2011, 200 more than last year. And same store sales of fashion accessory labels Jimmy Choo and Canali are growing 30% year on year. "What slowdown?" says Narayana Ramaswamy, executive director at consulting firm KPMG India, "In India, luxury products are flying off the shelves."
So, notwithstanding a massive dip in home sales overall, luxury homes are selling like hot cakes; and while car sales are skidding, there's no stopping the luxury car buyer.
According to a recent Merrill Lynch-Capgemini World Wealth report, India's population of HNIs surged 21% to 1,53,000 in 2010. This is the second straight year in which India's HNI population growth has been among the top gainers, the report said.
In its first volume of Wealthy Indians, Kotak Wealth-Crisil forecast that affluent individuals with assets of at least 25 crore would triple by 2016 to 2,19,000. Their assets may grow five-fold to 235 lakh crore.
The report also estimated the potential market for luxury jewellery at 22,900 crore and for the luxury cars segment at 15,000 crore. In a report released last week, Swiss wealth manager Julius Baer forecast that the wealth of HNIs in India who have $1 million or more in assets would more than double to 403,000 by 2015.
Rise and Fall
That explains why Ashish Chordia, chairman of Shreyans Group, which imports Porsche cars, is struggling to meet demand, while executives at other carmakers are struggling to meet targets. Porsche cars are made on demand, and usually have a three to eight month wait, depending on the model. "Our orderbooks are full and brimming," he says.
Chordia, who also imports Ducati bikes, opened the brand's first showroom in Bangalore in June this year. "We were in for a shock. In the first week itself, we sold 16 bikes."
In the April-July 2011 quarter, sales of car slowed down to 4%. But car sales in the luxury segment (for cars priced above 20 lakh), was growing at 10%. Sales of luxury labels BMW grew 129%, Mercedes Benz by 61% and Audi by 77%. Overall homes sales are down 30%, with inventories rising to 40-months.
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