You are on page 1of 20

NAME: - JANESH GROVER ROLL.

NO: - RT1007A09
REG.NO: - 11000795

CLASS: - B.B.A (I-sem) SUBJECT: - Micro-Economics

TERM PAPER
TOPIC: - ANALYZE THE GROWTH OF LUXURY CAR
SEGMENTS IN PUNJAB

Before we continue to the topic i would like to say thanks to


Ms. Palwinder kaur Madam who gave me such an intresting
topic for my research. Its my pleasure as well as golden
opportunity to work on the allotted topic. At last again i would
like to thanks for such a marvellous topic

[Type text] Page 1


Contents
Acknowledgment................................................................................................................
.................................1

Introduction........................................................................................................................
..............................1-2

How segmentation is
done?..............................................................................................................................2-
6

PUNJAB THE SUCCESSFULL PURVEYOR FOR LUXURY CARS IN


INDIA...................................................................6

PUNJAB MATERIALIZE AS A NEW BAZAAR FOR


CARS.......................................................................................6-8

List of luxury Cars in


Punjab............................................................................................................................8-
11

Rush for Luxury


cars.....................................................................................................................................
.11-12

Luxury car segments to continue its growth-run in


Punjab ...............................................................................12

Increasing Demand of Luxury


cars.....................................................................................................................13

Reasons for growing demand of luxury cars in


Punjab......................................................................................14

Luxury cars as the status


symbol........................................................................................................................15

International car brands recently launched in


India.....................................................................................16-17

Conclusion..........................................................................................................................
.............................

[Type text] Page 2


ACKNOLEGMENT
A Luxury car is a fashion, luxurious vehicle deliberated for console
and fulfillment of its owner or driver, forfeit passenger space, cargo
capacity and other practical concerns for the sake of style.

The luxury cars are very pricey and its price range is above
Rs 20 lakhs. Hence these cars are reasonable and are favored by high
income group.

Luxury cars have the capability to carry at the most 6


passengers. The companies like- BMW, Daimler Chrysler, Porsche, Rolls
Royce produce these cars and companies like -Aston Martin and General
Motors are still planning to launch their models in the market under this
segment.

INTRODUCTION
India set its base in the global automotive industry in 1898, with
the first car rolled out in the streets of Mumbai. Since then, India has come
a lengthy way. Taking into analysis the current statistics, automotive
industry is now, the most energetic sectors in India.
The car market of India possesses of attractive finance schemes, increasing
purchasing power and a gigantic variety of Luxury car range.

India being one of the profitable hubs for the car market is being a
focus for auto majors from all over the world. The count of people ready to
buy these high sticky label cars is gaining force. In consequence to this,
almost all the abroad producer including Mercedes, BMW, Audi, Suzuki, and
most recently Volkswagen have entered the battle. Ferrari’s statement to
roar into the India market from 2010 and Aston Martin’s aspirations to enter
the Indian market soon next year also signals that the market has just
chosen up pace and there are great possibilities for these understanding
vehicles to thrill the Indians.

[Type text] Page 3


Secondly, Change in mind-set of the customer accounts for the
unexpected acceleration in the Luxury car Market in India, as the weight
has been shifted from price reflection and affordability to design,
superiority and delight. The Indians who believed in habitual savings now
follow an overstated approach.
Stepping down to the third possible reason, coverage and obsession for
speed, power and grace run on to take their seats. With more and
more Car unite, demonstration, televising of Formula 1 and international
motor shows happening in the country, these deluxe coupés have created
an urge in drivers to experience console and power at the very sametime.
Also, lower interest rates and good conditioned roads are
some of the steps taken by the Indian government which stimulate the
demand for ultra-luxury cars in Indian market. Now, wounding into the
future, we can obstinately say that, with the real
GDP growth of India (8.8% in 2006) being outstanding, there are specific
forecast of increasing count of Luxury car buyers. Growth in the
luxury segment has been helped by an economy going up at nearly 9
percent on average in the last four years, and the entry of new company
and launches from the likes of BMW, Mercedes-Benz, Porsche and Audi.

Therefore, the picture seems to be apparently pompous that the


’Global Indians’ are all ready to catch the Luxury Car market to an all-new
high and it has been well said – “For a lavishness car to remain one, its skin
tone have to stay ahead of the pioneering curve”.

This marks the beginning of a risky race between money and over-
spending, which may go on forever.

HOW SEGMENTATION IS DONE?


A market segment consists of a group of customers who
share a alike set of wants. The marketer does not create the segments;
the marketer’s job is to identify the segments and decide which one(s) to
target. Segment advertising proffers several paybacks over mass
promotion. The company can create a more fine-tuned artificial goods or
service offering and price it properly for the mark segment. The company
can more easily select the best sharing and contact channels, and it will

[Type text] Page 4


also have a clearer portrait of its opponents which are the companies
going after the same segment

In the context of automotives sector, we would be classifying in the


following ways: -

∗ Based on the price of the car


∗ Based on the length of car
∗ Based on the user

BASED ON THE PRICE OF THE CAR


On the basis of price of car we can segment the car in following ways: -
 Economy segment
The economy segment of car range up to Rs. 2.5 lacs. The
productions in the segment are Maruti 800, Alto and the newly
launched product of TATA motors i.e. NANO.

 Mid-Size segment
The Mid-size segment of car ranges from 2.5 lacs to 4.5 lacs. It
includes the product like Hyundai santro, Maurti Zen, Tata Indica etc.

 Luxury car segment


The luxury car segment of car range from 4.5 lacs to 10 lacs. It
includes the product like Honda city, Hyundai Verna, Mahindra
Scorpio etc

 Super Luxury segment


The super luxury segment of car ranges above 10 lacs. This segment
satisfies the elite class of the society. It includes the products like
Skoda Laura, Honda Accord, BMW, Mercedes, and Audi etc.

BASED ON THE LENGTH OF CAR


 A segment- cars that are less than 3.5 meters long (800, Omni)

[Type text] Page 5


 B segment- cars between 3.5 meters to 4 meters long (Zen, SX4,
santro)

 C segment- cars between 4 meters to 4.5 meters long ( Verna,


Honda City, Ford fiesta)

 D segment- Cars that are more than 4.5 meters long (Mercedez,
Sonata, Accord Skoda)

BASED ON THE USER


Segmentation of automotive division is also based on the user of
the products. Like the example of TATA motors, when it observed that their
product ‘INDICA’ is used extensively by the Taxi operators, it came up with
a new model of the car having Round Tail Lights to distinguish it from the
car having vertical tail lights used by the individual buyers.

 Individual Buyers  Government / non-


government
 Taxi Operators institutions

PUNJAB THE SUCCESSFULL PURVEYOR FOR


LUXURY CARS IN INDIA
Punjab has stood one of the best sellers for the
luxury cars sales in spite of having the GDP growth rate of
5% which is just about high than the national expansion rate
of 9% and the agriculture growth rate of mere 2%.

The real-estate rumble in Punjab touched high and


the proprietor made quite good bucks by selling their lands
and the quick earned money played a task on spending on
luxury cars.

BMW trade extra than 90 cars in less than 6


months while Daimler is expecting to sell 200 units during
its financial year. Ludhiana holds the label of highest
number of Mercedes and the number is on the rise. Other
top models like Skoda and Corolla are also much admired
[Type text] Page 6
brands in the state. Volvo has appointed a new dealer
location in Chandigarh.

The research shows that regardless of the overall


picture of economy expansion in Punjab where state has
slither to 6th slot in terms of per capita income and many
industrial units transfer to neighboring states due to tax and
other be short of of capital, the car market is still up and
growing.

NRI money is also singing a role in giving rise to


the luxury car market and easy accessibility of back credits
have also given a push to this growth.

PUNJAB MATERIALIZE AS A NEW BAZAAR


FOR CARS
Ludhiana/Chandigarh, Nov.27 (ANI): Having been
punch hard by global decelerate, the automobile industry is
on the watch for new and beneficial markets to survive the
existing calamity. Today, the focus appears to be on
drumming markets like Punjab, as people here are liable to
buy new cars frequently.

Punjab is today outlook as a hot promote for cars


from the sales summit of view by the marketing gurus,
especially in the luxury segment.

The U.S. auto industry is faced by a position where


it looks standing on the edge of disaster.

The large industrial growth joined with the


prejudice to spending on machinery, has given a push to the
finest car segment in Punjab.

Recently, the Ford Company launched New Ford


Ikon in Chandigarh in view of the growing budding in Punjab
for cars.

[Type text] Page 7


People travelling long distance looks for latest skin
tone in their vehicle in terms of safety, security and drive
ability. For such people, this is totally right product. I think
we are going to have very strong market share for our new
Ikon Ford here.

Punjab is spinning into a luxury car haven as BMW,


Skoda, Audi, Volvos and Mercedes find breathing space in
the hearts and garages of the State.

Regardless of hold back, people here are willing to


squander money for their dream machines.

Manjeet Singh Bala, a dealer of Mercedes Benz,


said: Growth in the real estate, explosion in business and
good agricultural produce; keeping all this in mind there has
been a hopeful rejoinder in the market. So the Mercedes
bazaar has also come up.

As a mainstream of Punjabis buy cars with cash,


and do not depend on bank loans, the car market residue
secure in Punjab. Also, with growing incomes, the market for
luxury cars has been on the rise at an average of about 25
per cent.

The people here are having an adequate amount of


money to buy cars. They like to have most recent models
and machinery available in the market. Most of the luxury
cars are sold here in Punjab only. Seeing this tendency
companies are launching their products here. People in
Punjab have enough money and as well as style.

Despite the crisis, the small car sector has


achieved 15 per cent enlargement in Ludhiana city alone.
Maruti which sold 3,950 cars in 2007, has sold 4,544 cars
2008, which is up 20 per cent.

Mercedes Benz is also expecting to attain its target


of 490 in contrast to the sales of 455 cars in 2007.

[Type text] Page 8


It is believed that a positive `leaning” among
buyers will help the automobile industry conquer the crisis.
And the state of Punjab, where people want to drive
in”luxury”, will carry on to attract players in the automobile
sector. (ANI)

LIST OF LUXURY CARS IN PUNJAB

COMPANY MODEL VARIANT


Hyundai Motors Hyundai Santa Fe
Mitsubishi Mitsubishi Lancer Evo X
Audi AG Audi A6 Limited Edition
BMW BMW Z4 Roadster 2009
BMW BMW 530i

BMW 760Li
BMW-3s
BMW-5s New BMW 5 Series Sedan

BMW 5 Series Sedan

BMW 5 Series Security


BMW-6 Series BMW 6 Series Coupé

BMW 6 Series Convertible


BMW-7 Series BMW 7 Series Sedan

BMW 7 Series High Security


BMW X3
BMW X5

[Type text] Page 9


BMW-M BMW M3 Coupé

BMW M3 Convertible

BMW M5 Sedan

BMW M6 Coupé

BMW M6 Convertible
Bentley Bentley Arnage Bentley Arnage T

Bentley Arnage R

Bentley Arnage RL

Bentley Continental Continental GT

Continental Flying Spur


Fiat India Fiat 500
Lamborghini Lamborghini Murcielago

Gallardo

Gallardo Spyder
Mercedes Benz Mercedes Benz E Class
Cabriolet

Mercedes Benz S-Guard

Mercedes Benz E250

Mercedes Benz Mercedes Benz C class

C 200 Kompressor

Mercedes-Benz C 220 CDI

Mercedes Benz Cl class

[Type text] Page 10


CL 500

CL 600

Mercedes Benz Cls class

Mercedes Benz E class

E 280

E 200 Kompressor

E 280 CDI

Mercedes Benz S 350 L

Mercedes Benz ML 350


Porsche Porsche Panamera

Porsche 911 Carrera

911 Carrera S

Cayman S

Boxster S
Rolls Royce Rolls Royce Ghost

Rolls Royce Phantom V 12Phantom Coupe

Volvo New Volvo S80

Volvo S80

Volkswagen Volkswagen Phaeton

Volkswagen Beetle

[Type text] Page 11


RUSH FOR LUXURY CARS
It’s the other extreme of the car market. Away
from the mad rush of mass volumes and discounts, this
segment thrives on the statements pomp, power, style,
speed and the hefty price tags that often range from close
to a crore to a whopping Rs 6 crore. And car connoisseurs
do not hesitate to write out that fat cheque which many may
dismiss as splurging. So, the fight here is more for the finest
style statement and the brand than the price.

Welcome to the world of luxury wheels. This is the


world of Rolls Royce, Bentley, Lamborghini, Mercedes AMG,
Maybach , BMW and Porsche — fancied by almost
everybody but affordable only for a few, many of whom are
discussed as much for their high-profile personality as for
the cars they own. And while recession may have dampened
spirits, the pockets are still deep enough to indulge, as is
evident from the way many of these models are sold out
even before they are launched.

Sample the rush. Porsche fears that it will not have


enough Panamera sedans to meet the “unanticipated rush’’
in the Indian market despite the model carrying a hefty Rs
1.4-2 crore price tag. It’s the same with Mercedes that has
managed as many as five confirmed bookings for the Rs 2
crore SLS-AMG within days of of its launch. Audi also says its
R8 sports car beat expectations with bookings even before
launch.

And it’s not just about the rush to be the early birds — they
also want their cars to be customised. “It’s not a car that
these people look for, it’s more of a lifestyle,

Porsche, for example, has a special


customisation programme under ‘Porsche Exclusive’. The
German sports carmaker spoils customers for choice as one
[Type text] Page 12
can have over 100 customisations to choose from. So, you
can invent your own new colour for the car’s exteriors, or
decide to have a burmester music system (that can cost up
to Rs 5.5 lakh) on board, or have your initials inscribed on
door sills, or even have seat belts in the same colour as the
exterior.

LUXURY CAR SEGMENT TO CONTINUE ITS


GROWTH-RUN IN PUNJAB
The luxury car segment, which has
been witnessing a series of new car launches since the
starting of this year, is expected to grow by more than
20 percent in year 2010. Mercedes-Benz and BMW, the
top two luxury car makers in India, has taken the
growth momentum to a new level with the launch of
new corporate editions of their respective luxury
sedans in the segment of Rs 20 lakh to 30 lakh.

The sales numbers for luxury cars (over


Rs 25 lakh) reflect buoyancy and trends point to this
segment witnessing at least 20 per cent growth this
year, as per a statement given by Suhas Kadlaskar,
Director, Corporate Affairs, Mercedes-Benz India.

Mercedes Benz India, which has recently


replaced the BMW India from the top spot in the luxury
car segment of the country, sold 321 units of its cars in
India in April 2010 taking the total sales for the period
of January- April 2010 to 1,603 units, as against 949
units sold in the same period of year 2009, accounted
a sales growth of 80 percent.

The year 2009 saw overall sales of about


8,000 cars in the luxury car market. This was slightly
lower than the sales numbers achieved in last year.
The sales of last year were partly impacted by the
[Type text] Page 13
slowdown. But the business is looking up and the
volumes are going up, said a Mercedes official in a
statement given to a leading media group.

INCREASING DEMAND OF LUXURY CARS


India has finally arrived in the Automobiles sector.
The world’s largest consumer market for automobiles, India
is also seen as one of the largest manufacturers of
Automobiles in the world. This was already apparent when
there were a record number of footfalls this year at the
Auto Expo 2010.

Today many of the car makers all over the world


are making cars especially suited for the Indian consumers.
This year, at the Auto Expo 2010, there were ten
international car launches. These are all indications of the
ever booming automobile industry.

What is most exciting to see though, is the fact


that foreign luxury brands like Daimler AG and Audi AG have
seen local sales surge significantly this year. Thanks to the
rising demand of luxury cars, there has been a significant
increase in the local sales of both Audi and Mercedes Benz
cars.

Mercedes Benz India Pvt. Ltd, the Indian unit of


Daimler has seen a five fold increase in its sales this year.
Last year in January, Mercedes Benz had sold off only 82
cars in India. However, this year, the sales reached 403 cars
in January alone!

India is today home to the maximum number


of millionaires in the world. With the increase in the coffers,
[Type text] Page 14
there is also a proportional increase in the interest in
owning luxury cars. The ever shrinking demands in both
North America and Europe, has driven luxury car makers to
more lucrative markets in Asia.
Along with Daimler and Audi, BMW and Porsche
are also in the race to create space for themselves in the
Indian market. India is the world’s second fastest growing
economy in the world and it only makes sense that the
luxury car makers make cars exclusively for the Indian
consumers.
In 2009, Mercedes Benz had a tough time when
sales dropped by 10%, allowing competitor BMW to become
the largest seller of Luxury cars in India. BMW meanwhile
saw a 24% growth, firming its position further in the Indian
market.

The whole information depicts the clear picture of increasing


demand of luxury cars in India.

REASON FOR GROWING DEMAND OF


LUXURY CARS IN PUNJAB
India’s rise as an upcoming global economic
superpower is well known. Be it manufacturing, services,
FMCG, automotive sector, its success has been well
documented. With the advent of Nano and upcoming low
cost models from various other companies, India is being
regarded as the low cost car manufacturing hub of the
world with 24 lakh cars being produced every year.

With its excellent R & D facilities to back the


low cost labor, many multinationals have set up operations
for this purpose. But now something more revolutionary is
appending.

India’s top 10 luxury car models dominated by


Mercedes Benz, BMW and Audi have seen a 57% surge
in their sales between June 2009 – May 2010. Audi A6,
[Type text] Page 15
Mercedes Benz E – Class and BMW 3 Series models saw
more than 100% growth from last year. Volkswagen
had sales of 1,876 cars from January 2010 – August
2010, an increase of 66% of the same period last year
So how come is the shift happening in such a dynamic
fashion?

 Increasingly affluent population with high


disposable incomes and an extravagant lifestyle
 Increasing customer confidence because of
the growth of the economy – 8.8% this year
compared to just 6.7% last year
 The target customer who used to over 45 (top
level executives) earlier has changed to mid 30s
(entrepreneurs and those have reached success
at a young age)
 Newer reasons to buy these cars such as
festivities, gifts and also a means of flaunting
one’s wealth. Today’s generation increasingly
believes in the phrase “Got it? Flaunt it!”
 Up gradation to higher end models because
the prices fall after a very small period of time.
For example: Porsche Cayenne which is
available for Rs 95 lakh in the showroom can be
found for less than Rs 75 lakh in the used car
market after one year of use
 Increasing demand from the rural areas which
is in keeping pace with the economic growth and
development

The future of luxury cars in India looks increasingly


bright. It is expected to be the fifth largest
automobile market in the world by 2015.

LUXURY CARS AS THE STATUS SYMBOL


To drive in a luxury car is nothing but just a status
symbol. Great numeric of people does it to raise their
status symbol. Here are few instances of it. Indian
celebrities today are so charismatic in buying cars and own
the most classy luxury cars. The demand for luxury
[Type text] Page 16
cars has increased very much India. Luxury and super
luxury car has set up a trend especially among he
celebrities. They just don't own expensive cars but some
time they even gift their loved ones with luxury cars.

Owning a luxury or a super luxury car has


become a style statement as well as a status symbol
among the famous personalities. It is the natural tendency
of a human being to know more about the celebrity's life.
Every small details of an actor interest everyone. Here are
some of the celebrities who take royal rides.

Ferrari F360 Modena – Sachin Tendulkar


This 'hot' looking car is a dream car of many
people but the India's favourite cricket star Sachin
Tendulkar owns this dream car. Ferrari F360 Modena was
gifted to Sachin by the Ferrari's Formula 1 driver Michael
Schumacher on behalf of the FIAT, the Italian automobile
group that also produces Ferrari cars. The Ferrari also
carried controversy related to the custom duty as the
cricketer requested a custom duty to be waived off. Since
it was a gift, the Union Finance Ministry exempted him
from paying 120 per cent import duty. Ferrari F360
Modena, which carries the price of Rs 75 lakh, attracts the
custom duty of of Rs 1.13 crore.

This cricket star was gifted with world's one


of the hottest looking car Ferrari and another gift he
received from the ministry was the tax exemption. Now
this is a double gift. But is a common man had requested
for a tax exemption, would government agree? The answer
is 'NO'. It is the celerity power that speaks not the words of
a common man.

Bentley Continental Flying Spur – Abhishek


Bachchan
There has been one attention-grabbing
controversy when Bollywood icon Amitabh Bachchan gifted
[Type text] Page 17
to his son Abhishek Bachchan White Bentley Continental
Flying Spur on his 31st birthday. And the controversy
attached to this gift is that the duty some of Rs.8.5 million
was paid by their close family friend and a politician Amar
Singh. However when investigated by the Delhi Transport
authority, they had no record on the chassis number,
engine number, and name of the car owner or address of
the Bentley car that Amar Singh said it belonged to him.
Looks like a hush-hush kind of gift from his dad or Amar
Singh is still under cover. It is becoming a trend among
the celebrities to gift a car for any occasion.

Hummer H3 – Darshan & Sunil Shetty


Kannada actor Darshan who's been 'crazy'
about cars since childhood has made a stunning entry
when he acquired a perfect new Hummer H3. This
Hummer was imported from Dubai with the price tag of Rs
1.5 crore. Hummer from the house of GM Motors is a
popular brand of off-road vehicles. Initially, the actor
initially spotted with his Humvee the registration
documents or a number plate. Even the traffic authorities
were hypnotized by the celebrity glam and despite of no
documents let him off. Another bollywood who owns
Hummer is Sunil Shetty. He has a civilian version of the
Humvee, used by the US military.

Porsche Cayenne – Hrithik Roshan, Fardeen Khan,


Sanjay Dutt, Bipasha Basu
The hottest and the most desired car
Porsche Cayenne is owned by yet another hottest star and
kid's favorite super hero Hrithik Roshan. Porsche is a blend
of style and delight virtually infused with enthusiasm
where chassis is designed to seduce the buyers. Actors like
Fardeen Khan, Sanjay Dutt and Bipasha Basu are also
attracted to this car and are proud owners of this sporty.

Now everyone would definitely dream about


being a celebrity and driving such sizzling cars at least
once in a life time.

Rolls Royce Phantom – Amitabh Bachchan


[Type text] Page 18
For stupendous performance in the movie
'Eklavya', the bollywood legend, Amitabh Bachchan was
gifted with Rolls Royce Phantom worth Rs. 3.5 crore by
Vidhu Vinod Chopra. Apart from having this car, the great
Indian hero, Amitabh, also owns a number of other luxury
cars including the super BMW and Lexus.

INTERNATIONAL CAR BRANDS RECENTLY


LAUNCHED IN INDIA
The big bad Bugatti Veyron has finally arrived
in India and Exclusive Motors in New Delhi would be its
official partner in India. Exclusive Motors already is the
‘exclusive’ dealer for Lamborghini and Bentley in India.
The Bugatti Veyron comes with a 8.0 liter W16 quad-
turbocharged 1,001 hp engine mated to a 7-speed DSG
gearbox and the word ‘acceleration’ would be an
understatement for its 2.5 second 0-100 kmph sprint.

Though Bugatti’s official website doesn’t


mention the name of the its Indian dealership, but said
it was located at Hotel Samrat, New Delhi. We
guess Exclusive Motors would be selling the Bugatti
Veyron from its Lamborghini boutique located in the
same Hotel. It is to be noted that the Bentley
boutique of Exclusive Motors is located adjacently at
The Ashok Hotel.

Sources say that the first Bugatti Veyron in


India has already been delivered to a Mumbai based
real estate tycoon. We all know Bugatti Veyrons come
only in a two-two paint job, this Bugatti is Black and the
second color is not known so far. The Bugatti Veyron is
said to cost between 16 to 17.5 crore Rupees including
all taxes and duties. Soon two more Bugattis would be
delivered to a South Indian business magnate.

Since Bugatti Veyron comes only as a left


hand drive model, Bugatti is said to have requested the
Directorate General of Foreign Trade (DGFT) to exempt
the Veyron and permit it to ply on Indian roads. Would
[Type text] Page 19
this mean other exotic marques like the Koenigsegg,
Pagani, Spykar and all could come to India as a LHD
version on a special basis? We wish DGFT could allow
relatively cheaper, affordable muscle cars like the
Mustang and Camaro to come in to India with special
permissions.

CONCLUSION: -
India’s expedition to become a global auto
manufacturing hub could be seriously challenged by the
inability to upload its low-cost production base specially
the state Punjab. A survey conducted by the research,
KMPMG firm reveals that the Indian auto component
manufacturers are increasingly becoming skeptical about
sustaining the low-cost base as overheads including labour
costs and complex tax regime are constantly rising.

The survey said many executives believe that


India’s cost advantage is grinding down fast as labour
costs are constantly increasing and retaining employees is
becoming more and more difficult. Increased presence of
global automotive companies in the country was cited as
one of the reasons for the reasons for the high erosion
rate.

[Type text] Page 20

You might also like