Oct. 20 (Bloomberg) -- Lamborghini SpA sees opportunity in the streets of Mumbai, where three-wheeled rickshaws zigzag through bumper-to-bumper traffic on pot-hole-infested roads.
Volkswagen AG’s supercar maker plans to open its second dealership in India this year to meet increased demand for cars including the 36.9-million rupee ($750,600) Aventador, said Mohan Mariwala, managing director of Lamborghini Mumbai. Ferrari SpA, which opened its first dealership in the country in May, says it plans to open four more by the end of next year.
The surging number of millionaires, projected to more than double in India by 2015, is prompting supercar makers to expand in a country where the World Bank estimates more than 75 percent of people live on less than $2 a day. The demand for top-end models is a contrast to overall car deliveries, which have declined three straight months on higher borrowing costs.
“The wealth at the top of the pyramid is growing at a much faster pace,” said Deepesh Rathore, the New Delhi-based managing director in India for IHS Automotive. “Every month there is a new segment of buyers for these cars. People don’t take out loans to buy a Lamborghini.”
The number of millionaires in India will increase to 403,000 by 2015 from 173,000 in 2010, Julius Baer Group Ltd. and CLSA Asia-Pacific Markets said in a report in August. The growing wealth is expected to drive demand for exotic cars -- including Lamborghini, Aston Martin and Bentley -- to about 500 a year by 2020, from 180 last year, IHS estimates.
A.T. Kearney estimates the Indian luxury-car market will grow 32 percent a year over the next five years from $745 million in 2009.
Customers include members of the Super Car Club, who regularly meet and drive to Pune via a 100-kilometer (62 miles) expressway with their Lamborghini Gallardos, Porsche 911s and Ferrari 458 Italias. Membership in the club has grown 10-fold to about 200 since it was formed two years ago, according to founder Gautam Singhania.
“The roads in Mumbai are pathetic so we have to make do with what we have,” said Singhania, who is chairman of Raymond Ltd., a Mumbai-based textile and tooling company. “We cruise around the city and hang out.”
Lamborghini will likely sell 30 cars in India next year, Mariwala said. To cater to the local market, the company fits all vehicles in India with a so-called “lifting system” to raise the suspension on bad roads, he said. The cars can also run on regular gasoline instead of high-octane fuel, he said.
Aston Martin has met 24 of its 30-car sales target for the year, since opening its Mumbai showroom in April, according to Lalit Choudary, director of the dealership. The sales included the 21.5-million rupee Rapide sedan and 14.5-million rupee V8 Vantage.
“There’s obviously the wealth and the buyers out there,” Choudary said in a telephone interview. “It’s an aspirational segment and there’ll always be adequate demand given that it’s a segment that is just opening up.”
With mainstream cars, sales are slowing after the Reserve Bank of India raised interest rates 12 times since mid-March 2010 to rein in inflation, sapping consumer demand in a country where about 80 percent of purchases are funded by loans.
Industrywide car sales fell 1.8 percent to 165,925 in September, the third-straight month that deliveries have dropped, according to the Society of Indian Automobile Manufacturers. The industry group, which has cut its annual growth forecast twice this year, estimates growth of as low as 2 percent in the year ending March 31, 2012. Sales of Tata Motors Ltd.’s $2,800 Nano, the world’s cheapest car, have plunged 21 percent this year, industry data showed.
The outlook for Ferrari may be brighter as the sports-car maker begins to offer its full range of cars including the California model from 22.7 million rupees and the 34.2 million rupee four-seat FF, according to Ashish Chordia, chairman of dealer Shreyans Group.
Maserati will open dealerships in Mumbai and New Delhi by March, according to Anubhav Sharma, a spokesman for Shreyans, which also owns the dealership rights to the brand in India.
“A car is the biggest status symbol you can have,” said Neelesh Hundekari, the principal and head of A.T. Kearney’s luxury and lifestyle practice in India. “Indians are seeking status, and having been deprived so long, there is a lot of pent-up demand.”
--Editors: Chua Kong Ho, Young-Sam Cho
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