Wondering why you spot many more Mercedes, Audis and BMWs on Indian roads than before? Read this

Have you turned your head when a red Ferrari passed you on a busy road recently? Well, be prepared to spot many more Mercedes, Audis and BMWs as well. A recent Economic Times report reveals that India's luxury car market has grown eight times in the last seven years from 4,000 units in 2007 to 33,000 units in 2014. Luxury car experts are expecting this number to reach 100,000 units by 2020.

Recovering from the slowdown of 2012 and 2013, the luxury car market in India has shown stronger growth than the mass market segment, like other high-growth emerging markets such as Brazil, Mexico and Russia. Even during the lean period, top luxury brands like Audi and Mercedes Benz have grown at double-digit pace, making India one of the "strategic markets" in Asia.

Audi India MD Joe King believes that the Indian luxury car market will "at least double" by 2020 and should actually do much better than that. "The market has grown eight times in the last seven years," he told the Economic Times. "Typically, the premium segment displays a better dynamic than volume segment in many BRIC markets including India,” he added.

The experts believe a chunk of the future growth could come from non- metro cities."Along with the metropolitan centres, we foresee growth potential among the young achievers, predominantly from tier 1 and tier 2 cities, which have a dynamic attitude and are technology savvy," Philipp Von Sahr, president, BMW Group India told ET.

Understandably, India's rise in luxury car segment is prompting the big guys in the business to do some strategic thinking. Mercedes Benz, for example, has doubled production capacity to 20,000 units annually and with fresh investments, increased its total tally to Rs 1,000 crore. "This makes Mercedes-Benz the luxury car brand with the highest installed capacity in India," said Kern. And while Audi officials are still tight-lipped on the investment question, sources say it's a matter of time before the details are firmed up.

Audi global head of marketing and sales Luca de Meo, while discussing the issue with the financial daily said, "India is a strategic market for Audi and the fourth top market in Asia after China, Japan and South Korea. We have a 34% share of the Indian market which is among the highest for us globally." Audi has a similar market share in China where as Brazil its other growth market, is lower at 32%, said de Meo. That's the reason Audi is taking a "long-term" position on India.

As for BMW, India may not be among its high-volume single markets yet, but Von Sahr believes, "the future belongs to India. If you want to benefit from the dynamics of the Indian market later, you need to act today."

BMW already has a manufacturing plant in Chennai and has so far invested over 51.8-million euros in India.

(Image: Reuters)