The slowing rate of decline of car sales is a ray of hope for the Indian auto industry. However, automakers are still suffering from a lack of demand, which is still a far cry from pre-COVID-19 levels. As the pandemic has dealt the sharpest blow to high-ticket items, the luxury car segment is possibly the worst hit and likely to be the last to recover. When saving cash and being financially prudent is the order of the day, buying a luxury car is not the highest priority for consumers. As a result, the luxury segment, which was a tiny niche to begin with, is shrinking further, with demand shifting downward to the more affordable spectrum of the market.

  • Indian luxury car market has shrunk significantly due to COVID-19 pandemic
  • Year-on-year sales has dropped by 59 percent in July 2020
  • Mercedes-Benz India market share has increased despite a 47 percent decrease in sales

Earlier this month, the Federation of Automobile Dealers Associations (FADA) had, for the first time, released manufacturer-wise retail/new vehicle registration details for July 2020. This data reveals that the combined share of luxury car players in the total passenger vehicle market has shrunk to 0.50 percent in the month, compared to 1.11 percent in July 2019. July 2020 sales numbers of the 10 luxury carmakers that retail cars in India reveals that year-on-year demand has dropped by 59 percent to 924 units (July 2019: 2,242 units).

Despite current market trends, luxury car market leader, Mercedes-Benz India, is faring far better than its key rivals. Continuing from where it left off in the January-March 2020 period (2,386 units), with a marginal lead over BMW India’s 2,365 units, the German luxury carmaker has registered strong performance in July.

FADA data has it that Mercedes-Benz India retailed a total of 418 vehicles, down 47 percent year-on-year (July 2019: 786). This number includes sales of 18 CBU models – primarily its flagship GLS SUV. However, in terms of market share, the market leader has increased its share to 45 percent from 35 percent, a year ago.