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Home , Luxury car

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 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 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 recently launched in India...... 16-17

Conclusion......

[Type text] Page 2 ACKNOLEGMENT

A is a fashion, luxurious 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 , , Rolls Royce produce these cars and companies like - and 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, , Suzuki, and most recently have entered the battle. ’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 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 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 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

P UNJAB 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.

P UNJAB 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 Evo X Audi AG Limited Edition BMW BMW Z4 2009 BMW BMW 530i

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

BMW 5 Series Sedan

BMW 5 Series Security BMW-6 Series BMW 6 Series Coupé

BMW 6 Series 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 Arnage T

Bentley Arnage R

Bentley Arnage RL

Bentley Continental Continental GT

Continental Flying Spur Fiat India Fiat 500 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 911 Carrera

911 Carrera S

Cayman S

Boxster S Rolls Royce Rolls Royce Ghost

Rolls Royce Phantom V 12Phantom

Volvo New

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 than the price.

Welcome to the world of luxury wheels. This is the world of Rolls Royce, Bentley, Lamborghini, Mercedes AMG, , 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 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: 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 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 .

INTERNATIONAL CAR BRANDS RECENTLY LAUNCHED IN INDIA

The big bad 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 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