Mercedes says Demand for luxury cars is set to pick up after slump

With the global economy slowing down, demand for cars is declining. However, the downturn of demand may be over for luxury and premium carmakers. Due to recent consumption slowdown and a lack of liquidity in the lending sector in the aftermath of IL&FS crisis, sales of luxury cars has declined.

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Mercedes sales improving in the country

German carmaker Mercedes Benz has reportedly said that the luxury car market in India has bottomed out after almost a year in declining sales. The country's largest carmaker's sales have improved 25% during the period of July to September over the preceding quarter cushioned by a 29% rise in sales in August to September period. The sales in October looked better than September as per Martin Schwenk who is the managing director of Mercedes Benz. 

He said that in terms of sales decline, Mercedes has bottomed out.  The overall auto industry should have bottomed out as well. As far as his company is concerned he is cautiously optimistic to come back up and make 2019 an exception and not the rule. Last week, a spokesperson for BMW India who is Mercedes' rival had said the demand is improving slowly but steadily over the upcoming three to four quarters. 

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State of the car market in India

Due to recent consumption slowdown and a lack of liquidity in the lending sector in the aftermath of IL&FS crisis, sales of luxury cars has declined. With around 350,000 millionaires in the country and relatively less purchase of luxury cars as compared to other developed nations and economies, the luxury segment usually performs better in the overall market in India. During the nine-month period from January to September this year, the industry has sold 26,000 to 28,000 units of luxury cars in India reportedly according to industry estimates which is a slump of 20% over a Year-on-year basis. 

Schwenk has said that Mercedes is planning to launch a new product every month on an average every year over the next few months with an expansion in the overall number of dealerships to bring in more customers into its rising consumer base. He said that if Mercedes Benz manages to reach the sales the company had in 2018 he would be fine for the period of October to December. 

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(With inputs from agencies)