India sis considered as one of the fastest growing markets in the world today. India's economy is buoyed by relative stability in the country as well as increased investor confidence in the country. Together with China and Brazil, India is considered as the top emerging market with a high market turnover for its products. The major drivers of the economy in India include the trade balance that has India exporting more products than it imports. In view of this, the lifestyle of the citizens in India is no doubt likely to change under the healthy economic times. The stable economic growth has introduced a new segment in the market which comprises of luxury consumers. It is assumed that the luxury consumers in India are increasing at a steady rate in almost all the sectors of the economy. The largely untapped market has over the years been lucrative for business targeting the luxury consumers in India.
Understanding India's luxury consumers
"The luxury market in India is one of the largest and most diverse markets in the entire world" (Majumdar& Gupta, 2003, p.13). It is therefore a great challenge for start-up companies to establish a market presence owing to the presence of huge competition in the country's luxury market. From a global perspective however, the luxury market in India is seen as largely young and unpredictable which explains why some investors are apply risk aversion measures when investing in the said market. Some of the products competing in the luxury market in India include automotive, clothing, footwear, electronics and luxury wines.
India's luxury car Market
The Indian economy has been growing at an impressive rate over the last five years with the nation averaging a consistent growth of approximately 8%. In addition to this, the luxury car market segment has been growing at an impressive rate of 25% .India's luxury car market segment has grown significantly over the years setting the nation ahead of other countries acorns different parts of the world in the automotive industry. In addition to this, the country has seen the entire automotive industry experience a steady growth making the sector a fundamental pillar of the nation's economy. The growth to success of the luxury car market begun in 1898 when the first luxury car brand was introduced in the Indian market. The market reception was overwhelming a situation that saw manufacturers realize the potential of the luxury car market in India. Since then, the market has grown significantly with the current statistics indicating that the growth potential could be only halfway attained. This implies that if effective strategies are implemented within the market, then the luxury car industry could grow at twice the rate it is growing currently.
Some of the key factors driving the growth of the luxury car market in India is the increasing purchase powers of the consumers in addition to the availability of a wide variety of vehicle brands to choose from. The desire to but luxury brands in India is picking with most consumers in the economy going for top-of the range products and in particular within the automotive industry. Most of the major car manufacturers across the world have entered the fay in the market with companies such as Volkswagen, BMW, Mercedes Benz and Suzuki competing for a significant share of the market. However, the turning point within the luxury car market is when Ferrari announced its entrance into the market which is a clear indicator of just how the manufacturers are targeting the market in India. The aspiration that other major auto makers such as Aston martin are likely to enter into the Indian market in the near future shows that the market in India has unlimited opportunities and growth potential.
"Over the recent past, the Indian manufacture TATA motors acquired Ford's land Rover and Jaguar brands" (Mukherjee& Sastry, 2002, P.45). This acquisition is a clear indication that the nation's manufacturers in the automotive industry are within the right direction to compete with other key major players in the industry. India as a nation therefore is seen as driving the automotive industry in the Asian continue an area that has remained untapped for many years.
Factors Contributing to the Growth of India's luxury car Market
Population growth is one of the factors that is driving change in the Indian's luxury car market. This is because, the high population reflects the availability of the existing and potential market for luxury brands. However, the application of the population increase concept in relation to the market is entirely dependent on whether the market has the ability to purchase the luxury cars. Should this growth had happened in the past, a larger part of the population would not have been in a position to purchase luxury cars in India? However, the prevailing economic times and the rising disposable income in India has led to a situation whereby a greater percentage of the population can afford luxury car brands.
Changing Consumer Tastes and Preferences
Consumers are very vital in changing the market dynamics. However, there are certain factors that consumers look for when making the decision on whether to or not to make a purchasing decision. Traditionally, price has always been the primary factor that is considered when making a purchase decision. A product with a high price is likely to attract lesser potential buyers as opposed to products that have the aspect of affordability. However, this whole attitude and approach to the market and consumption trends has changed. In the luxury car market, consumers have shifted their focus from price to design and the quality of a product. This by extension means that a larger percentage of luxury products consumer do not consider the price of the product as a determining factor in the purchase choice and decision.
The development made in infrastructure have seen the need by the market to buy luxury car brands since it is possible to use such brands on the road. The infrastructure could have been a great limiting factor in the past which in particular suggests why the luxury car market was not growing at the pace its growing with today. The advancement in technology has also played a key role in this area where most consumers within the market feel the need for power and speed on the roads similar to what is depicted in popular film and other media platforms. Such trends are seen as playing a major role in influencing the decision regarding to or not to purchase a car brand.
Potential Challenges to the Growth Potential of India's luxury Car market
The luxury car market is one of the market segments that market analysts say defies the conventional economic approach to competition or even global economic outlook. In this case, consumers continue to purchase luxury brands even when the economy of a country is not looking to good. How then are people still able to consumer luxury brands amidst uncertain economic times such as during recession? One of the most plausible explanation is that in such circumstance, consumers look beyond other factors than price alone. This in essence means that the consideration are dependent on the desire of an individual to acquire a certain brand while at the same time overlooking economic effect on the said consumption decision. There are many cases where the luxury car market across the world has continue to soar even during the recession period. Some of the nations that have experienced a similar situation include the United States, Germany and China. In 2008, most of these nations were facing tough economic times characterized by slow economic growth and reduced investor confidence. This situation greatly changed the spending and consumption patterns in the said nations. However, the luxury products market remained either consistent or experienced some growth during this period.
Despite the positive outlook when it comes to luxury brands, analyst warn of a situation whereby the prospects in the luxury market potential will greatly reduce. Several factors have been cited as likely to cause such a scenario. However, economists are also optimistic that such a resultant situation is only a matter of last resort and is likely to occur only when all the other factors have been pushed to the limit. This is because, a reduced slow growth in the luxury products market would have to be as a result of a combination of factors that have an overall effect on the individual, micro-economy and the macro-environment for nay significant change to take place.
"The luxury car market faces several challenges along the growth path that are likely to slow down the growth prospects made in this area"( Kapferer & Bastien,2009 p.311). Some of the challenges likely to affect the luxury car market in India include;
Despite infrastructure big seen as one of the factors that contributed to the growth of the luxury car market in India, poor infrastructural development is also seen as one of the major factors inhibiting the growth potential of the luxury car market. The demographic pattern sin India point out to a situation whereby the urban areas in the country are well connected by either road, rail or air transport infrastructure. The problem is that a larger part of the country does not have some of the infrastructure required to handle luxury car brands. From a physical traits approach, luxury cars cannot be able to withstand bad terrain or even rough roads. Assuming that a larger part of the nation is made of uneven terrain and rough roads, then the market segment of the luxury cars would only be limited to those areas with good infrastructure and in particular major cities such as Mumbai,. The argument here is the infrastructure developments can greatly speared the market of luxury cars if the nation is well connected in relation to these developments provided that such development does not take place only in specific areas of the country.
The government through the relevant regulatory authorities often regulate the industry in relation to the importation and exportation of produ