The auto industry in India is a sprawling one, covering everything from two- and three-wheel vehicles to large vessels built for public transportation. Altogether, this means that said industry incorporates a number of different sectors, each of which can be treated as its own category where investment is concerned.
To that point, data from this past summer indicates that the luxury car sector, in particular, is providing intriguing opportunities for investment. Indeed, the first half of 2023 showed luxury car sales to be at an all-time high, with healthy year-over-year growth being recorded by top carmakers across the board. In the case of Audi India, that growth even reached as high as 96.83%.
But why exactly are luxury auto sales taking off throughout the country, and how can investors in the sector take advantage of the situation? Below, we’ll explore these questions, as well as which carmakers are particularly worthy of speculators’ attention.
Why are Luxury Car Sales Booming?
The main underlying reason for the boosts in luxury car sales of late is likely the economic standing of Indian consumers. In the past year, there have been indications that disposable income has risen, with the result that some Indian families are more comfortable buying things they want but don’t necessarily need – such as luxury vehicles.
Now, it is true that recent inflation may have put a damper on some families’ or individuals’ plans for disposable income. Even so, however, a report surveying economic conditions earlier this year found that private consumption in the first half of 2023 was at its highest since 2015. In the second quarter of 2023 alone, private consumption as a percentage of GDP was at 58.4%. This indicates that some of that disposable income is being put to use and undoubtedly accounts for a significant portion of the spike in luxury car sales.
There are a few other factors as well. Among these is the fact that India is beginning to see more luxury vehicles coming from areas that did not produce them in the past.
Most notably, the ongoing emergence of electric vehicles throughout the country is helping to expand the luxury market. Where in the past EVs were looked at as functional vehicles, electric car technology is now a primary focus for a number of premium carmakers who are combining battery power with traditional luxury makes and features.
From the Audi e-Tron to the BMW i4 and i7 to the Jaguar I-Pace, this evolution is putting more luxury vehicles on the market in India. At the same time, meanwhile, we are also seeing some carmakers associated with more economy vehicles flirting with more luxurious constructions. The Mahindra XUV700, a mid-size SUV profiled here previously, is a fitting example; it may not have typical luxury billing, but it exists, at least, on the fringe of the luxury market.
Perhaps the biggest factor outside of rising private consumption, however, is the fact that traditional luxury brands are also introducing new and popular models, even aside from their forays into electric technology. The same report that cited the spiking sales of luxury vehicles in India pointed to four brands in particular that are leading the way: Mercedes-Benz, BMW, Audi, and Volvo. All of these carmakers are selling multiple models, including some of their latest new vehicles.
How Can Investors Benefit?
The first thing investors can do to set themselves up to benefit from India’s surging luxury vehicle market is to find a reliable platform for monitoring and trading stocks online. While it is always possible to simply look up a given share price at any given time, a proper trading platform will provide the most up-to-date price listings, as well as show in-depth tracking and analysis of prices over time.
With access to this information, an investor can assess the performance of luxury carmakers, determine which of those carmakers are best positioned to continue performing well, and – when ready – buy-in.
As for which relevant auto companies are worth looking into, there are several notable examples that might help a prospective trader get started with an analysis of the space. The following are a few to zoom in on:
Mercedes-Benz Group ADR – While not an India-based company, Mercedes-Benz is among those manufacturers that have seen its luxury models becoming popular throughout the country. It is also a luxury brand with a stock that has performed quite well of late, with a 5.32% increase in the last five years and a more dramatic 22.74% spike in the last 12 months alone. With several new luxury models on the way in India (including the GLC Coupe 2023, the GLB 2024, and the GLA 2024) and worldwide forays further into the EV market expected, Mercedes-Benz is also in a strong position to continue performing well.
BMW – BMW is also not an Indian brand, but it is a popular luxury brand among Indian consumers all around the globe. Like Mercedes-Benz, this manufacturer has strong stock as well, with a share price that has jumped 3.31% over the last five years but an impressive 36.38% in the last year specifically. With the BMW 5 Series 2024 and the electric i5 expected on the Indian market in the next year, consumers around the country should continue to see more of what they like.
Tata Motors Ltd – An Indian brand traded on the NSE, Tata Motors Ltd. is responsible for the manufacturing of numerous types of vehicles. The brand also counts Land Rover and Jaguar among its properties, however, which gives it a significant stake in the luxury vehicle market in India. Tata also has an admirable stock at the moment, with a share price that is up 153.33% over five years and 49.07% in the last year. This company’s explosive growth alone is reason for investors to give it serious consideration.
These are just a few of several examples of carmakers to zero in on, but they do show that increased interest in luxury vehicles of late has been reflected in share prices.
Ultimately, as is the case in any conversation about investment, there are no guarantees. A strong recent history of luxury vehicle sales does not mean that the next year will be the same; a share price that has surged in recent years may not continue to do so moving forward. With that said, there are numerous strong indicators where the luxury vehicle space is concerned, and Indian investors who are intrigued by the industry would do well to conduct further research.
Luxury vehicle sales have spiked considerably, and investors have the means to assess stock prices and buy in as they wish. It is certainly a market worth taking a close look at.