Indian luxury cars - All revved up?

The Indian luxury car industry is all geared up. The reason is the launch of Hyundai's Sonata and Honda's Accord, which will create a whole new era of D segment luxury cars. And the market will be aggressively competitive despite the low passenger car volumes - a modest 5,000 to 7,000 cars a year - with car giants like Honda, Ford and General Motors promising to dish out new and more powerful cars.

The Indian car market has definitely come a long way in the past two decades. Fifteen to twenty years ago, Ambassadors, Premier 118s and Fiats held court. However with the intervention of Sanjay Gandhi, Maruti Suzuki came to India. In 1989 - 90 came the Esteem priced at Rs 4 to Rs 4.5 lakhs. Following it, were the Escort, Mitsubishi Lancer and others. And the last two years have seen a phenomenal growth in the A and B segments with the entry of the Matiz, Indica and Santro. Then came the sensational Qualis launched by Toyota. Despite a disadvantage in appearance, it is often sported as a status and prestige symbol.

As of now there are four dominant segments. In the A segment, there's Maruti 800, Fiats and others. In the B segment, there's Santro, Matiz and Tata Indica. Ford Escort, Mitsubishi Lancer, Ford Ikon, Mercedes and others are the ones in the C segment.

But with bigger and highly disposable incomes, with people who most often travel in Opel Astras and Honda Citys willing to graduate to more expensive cars, the D segment car manufacturers have chosen the right time to make their presence in the market. Two companies that have made an entry of late in this segment are Hyundai with the Sonata and Honda with the Accord. These giants believe that their target audience will not mind shelling out Rs 12-16 lakh for experiencing the best of the automotive sensation.

The price war that has begun with these new entries had its beginnings with the launch of the Mercedes C class, priced at Rs 19,90,000 (ex-showroom, Mumbai). Before this, all that was required was to pick an exact price from the huge gap that existed in the market between the most expensive car - Mercedes Benz S320L at Rs 62 lakh (their least expensive until recently was the E220CDI priced at Rs 30,46,509) and the next expensive one was the Mitsubishi Lancer variant priced at Rs 9,94,719. Comparing prices from launch of the Esteem, a definite trend shows that prices drastically increased by Rs 6-8 lakhs with every new launch.

But the introduction of the Mercedes C class changed the whole pricing gamut. Even the Honda Accord, despite being in the D segment, is priced Rs 5 lakh below the C class. However the group can bank on its international popularity and brand status in India, to give them a head start. It is also a more powerful car with a 2.3 litre engine. All these factors perhaps give it an upper hand over the Hyundai Sonata.

However Hyundai is also a very strong brand in India thanks to Santro. It launched the Sonata in mid-July with a pricing of Rs 12-13.4 lakh. With over two lakh cars in the Indian roads, Hyundai can today boast of an unparalleled product support network, says Hyundai Motors Director (Marketing) BVR Subbu. He is confident that the Sonata would be a great success in India.

Despite their recent launch, both the cars have done exceptionally well. Accord, within a few weeks of launching, had already sold 300 units. And according to sources, Sonata has created enough interest within 10 days of its launch for Hyundai to deliver 55 units in July alone. This spurt in sales clearly indicates the interest and the excitement that has been created in the car market. Now we shall await the much talked about car - Ford Mondeo. Here's cheers to a revved up industry!

Source: The Economic Times, Business Today and others