Growth of luxury car segment

in Punjab

Introduction:
The large industrial growth coupled with the
flair of spending on machines, has given a
push to the premium car segment in Punjab.
Despite the diminishing agriculture growth,
Punjab is turning into a luxury state, as BMW,
Skoda, Audis, Volvos and Mercedes find space
in the hearts and garage of the state. Increase
in sales of automobiles in the luxury segment
validates the fact that the people of Punjab
are ready to shell money for their dream
machines.
Despite dwindling agricultural income and
increasing suicides by farmers in Punjab, the
state remains one of the bestsellers for luxury
cars in India. And, the growing density of
luxury cars is a clear indication of growing
income disparities in the state. Despite a
modest GDP growth rate of 5 per cent in the
state in the last financial year, a little more
than half the country’s growth rate of 9 per
cent, and a stagnant rate of growth in
agriculture at 2 per cent per annum for the
past five years, the automobile sector
considers it a potential market for the new
launches. Apparently remittances from NRIs
(non-resident Indians) contribute immensely
but another factor is the sudden shift of
income because of the real estate boom. The
land prices in the state have broken all
records and the landlords and rich farmers
are becoming richer by selling land. The quick
money earned is being mostly spent on luxury
cars. The market potential of Punjab can be
perceived from the fact that Volvo Car
Corporation appointed a dealer in Chandigarh
at AB Carz Private Ltd (the other two in Delhi
and Mumbai). Other premium models like the
Skoda and the Corolla are fetching good
returns to the dealers.
Objectives:
The objective of this term paper is to throw
spotlight on the increasing trend of luxury
cars in Punjab due to increasing wealth and
prosperity, in the richest state of the country.
In the end of this term paper I will be familiar
with
• Number of luxury cars in Punjab.
• Different brands of luxury cars available in
Punjab.
• %age growth of sale of luxury cars in
Punjab.

Analysis:
In Punjab, people are inclined to buy new and luxury cars
frequently and is being viewed as the hot market for all
cars. The large industrial growth coupled with the
partiality to spending on machines, has given a push to
the premium car segment in Punjab. Punjab and Haryana
are capturing the 15% of the luxury car such as Audi,
Porsche and BMW market of the country. Jalandhar and
Ludhiana have the largest number of Mercedes in India.
Punjab has plenty of NRI money and they spent them on
luxury items like cars. Luxury cars are a status symbol for
the people in Punjab along with Chandigarh.

The people here are having enough money to buy cars.

They like to have the latest models and technologies
available in the market. Most of the luxury cars are sold in
Punjab. Despite the crisis, the small car segment has
achieved 15% growth in Ludhiana city alone. Maruti,
which sold 3,950 cars in 2007, has sold 4,544 cars 2008,
which is up by 20%.

Mercedes Benz is also expecting to achieve its target of

490 in comparison to the sales of 455 cars in 2007.
Ludhiana holds the tag of highest number of Mercedes
and the number is growing. Other premium models, like
Skoda and Toyota Corolla, are also very popular brands.
Mercedes Benz has sold 3625 cars in 2008, out of these
275 were sold in Punjab. The BMW has sold 90 cars in
the first six months of the same period. In 2007, only 175
Mercedes cars were sold in the state.
Total Vehicle in Punjab (31.3.2009) 48, 31,531
Passenger Cars 4, 44,465
All two wheelers 35, 81,837

When Sweden-based Volvo Car Corporation announced

its foray in the country with its premium sedan S 80 and
SUV XC 90, the first city that will get to ride the vehicles
will not be any of the metros but Chandigarh. While that
may be a first, it does not come as a big surprise as Punjab
with its break-neck pace of growth and per capita income
has been a hot bed for luxury sedans and SUVs for quite
some time.
Volvo India President Paul De Voijs admits as much. “To
begin with, we are opening one dealer each in Delhi,
Mumbai and Chandigarh but the first cars to hit the roads
may be in Punjab. The selection of the cities was
deliberate and conscious as cities like Chandigarh, and
Ludhiana in Punjab have a high per capita income which
obviously means that the potential for our high-end cars is
much more there,” Voijs said.
Volvo is not the only company to make its presence felt in
the state. Premium brands like Mercedes and BMW
already have dealers in Punjab, much before most of the
other states. Competitors like Audi and Volkswagen are
also looking to appoint dealers there.
But per capita income alone is not the reason for Punjab’s
fixation for premium sedans and SUVs. Strong business
community, entrepreneurs and terrain are some of the
other reasons that have spurred the demand for such
vehicles.
“One of the big reasons why SUVs are in such demand in
Punjab is because of its nature of terrain and habitation.
There is a lot of off-roading that is required there and the
vehicles need to be sturdy and tough. SUVs fit the bill
perfectly,” said Society of Indian Automobile
Manufacturers (SIAM) director General Dilip Chenoy.
The state is also a happy hunting ground for Daimler
Chrysler which sells a significant number of its C and S
class models there. The company has two dealers in the
state, one each in Chandigarh and Ludhiana. BMW which
is a relative newcomer to the fold has also got a warm
reception. In the last four months, 70 BMWs (3 series, 5
series and 7 series) have been sold in the state.
“The popularity of sedans can be attributed to the fact that
the state has a number of business families and is also rich
in entrepreneurial talent. This means that there are quite a
few CEOs in the state for whom a car is a status symbol
and a high end sedan is a must,” Chenoy said.
There is also another clan which is quite fond of SUVs
and Mercs — the politicians. Their preference to the Ford
Endeavours and Mitsubishi Montero is more a safety
precaution than a status symbol.
An Endeavour for example is an integral part of a regional
politician’s entourage and the trend starts from the top.
Haryana chief minister Bhupinder Singh Hooda’s
cavalcade consists of 11 Endeavours while his counterpart
in Punjab Prakash Singh Badal is rumoured to be in
process of building up a security net of 25 Monteros.
Their respective ministers have also emulated them and
have a sizeable number of Endeavours and Pajeros.
Almost one Endeavour everyday is sold in Punjab and
that’s way above the national average for the car which
does around 200 units a month.
Punjab is today viewed as a hot market for
cars from the sales point of view by the
marketing gurus, especially in the luxury
segment.
Following are the luxury cars available in
Punjab:
• Skoda
• BMW
• Audi
 • Volvos
• Mercedes
For Punjabi’s cars are the status symbol,
they are ready to spend any amount of
money for that.

According to a survey there are:

3,400 Mercedes in Punjab out of which 2000
are only in Ludhiana, the richest city of
Punjab.
2,700 Bmw’s in Punjab and 1700 only in
Ludhiana.

Conclusion and implications:

In the end it is concluded that Punjab is
turning into a luxury state. Punjab is turning
into a luxury car haven as BMW, Skoda, Audi,
Volvos and Mercedes find space in the hearts
and garages of the State. Despite slowdown,
people here are willing to spend money for
their dream machines.It is the richest state of
the country and people over here have high
money spending power.For them owning a
luxury is a status symbol and they can spend
any amount of money for maintain their
status. The people here are having enough
money to buy cars. They like to have latest
models and technologies available in the
market.
Real estate boom has also played a major role
in this. The land prices in the state have
broken all records and the landlords and rich
farmers are becoming richer by selling land.
The quick money earned is being mostly
spent on luxury cars.
The Richest state of the country has the
maximum number of luxury cars.
ROYAL TASTE OF ROYAL PEOPLE OF ROYAL
STATE OF PUNJAB.