Luxury car market ends 2016 with steady volumes

Note ban, diesel ban have little impact; Mercedes posts marginal decline, BMW sales rise 14%

The luxury car market appears to have been steady last year in spite of the challenges posed by the diesel ban and the setback caused by demonetisation. German luxury car maker Mercedes Benz has managed to remain market leader despite a marginal drop in volumes. BMW, another leading player in the segment, has clocked 14 per cent growth in sales on a low base of 2015. The mass market of passenger vehicles grew seven per cent in 2016.

Mercedes sold 13,231 units in the Indian market last calendar year against its best ever annual volume of 13,502 units in 2015. An increasing number of models in the SUV segment helped the company maintain its volumes.

"The year 2016 was a year of market challenges but despite facing such challenges, it is quite satisfying for us to have made the best of the opportunities that we had," said Roland Folger, managing director and chief executive officer at Mercedes while maintaining a 'bullish' outlook for 2017. The company said its growth strategy for 2017 will be marked by an aggressive product line-up, which will see the launch of new products across segments.

BMW said its India sales grew 14 per cent in 2016 to 7,861 units. The company, which had not announced its volumes for 2014, claims to have increased its market share during the last year.

Frank Schloeder, President at BMW Group India said developments in the Indian economy and policy framework (in 2016) shook the mechanisms of the auto industry. "BMW Group India was faced with challenges no less than any other automobile manufacturer and was confronted with strong pressure".

In December 2015, the Supreme Court imposed a ban on sales of diesel vehicles with engine capacities of 2,000cc and above in the NCR, to address pollution. The ban impacted sales of diesel vehicles even for engines below 2,000cc. It was lifted in mid-August last year, after the industry agreed to pay a one per cent cess. NCR is the biggest market for these cars. Sales started normalising in September but a second setback came from the demonetisation announcement in November 2016, which left less cash in the hands of buyers. Demonetisation prompted these luxury car makers to offer steep discounts of up to 20 per cent to buyers and clear inventory of cars manufactured last year.