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SCMP Reporter

FOR India's nouveau riche, astronomical prices of consumer durables are more an attraction than a deterrent.

  Owning the costliest of them all seems to have become a status symbol for the country's glitterati.

    How else can one explain the presence of luxury car-makers like Rolls-Royce, BMW and Jaguar in a country that, until Mercedes-Benz tied up last year with the Tata group to produce the Mercedes E-220 in India, could boast only of a mid-size family car as a top-of-the-range model?    At the Auto Expo exhibition, under way in New Delhi, the focus of attention has not been on the middle-of-the-range models that might have been expected to capture the minds of the country's burgeoning middle classes, but on several luxury cars being exhibited by some of the most revered names in the business.

   Rolls-Royce is displaying a car at 10 million rupees (about HK$2.15 million).

   BMW is exhibiting cars priced between 3.5 million and 6.5 million rupees.

 Jaguar is displaying a model priced at GBP60,000 (about HK$715,000) in Britain, and which the company is interested in exporting to India.

   Never mind that the import duty on fully built cars is 110 per cent, and 65 per cent on car parts or kits.

  The fact that tariffs only increase the price simply adds to the status of the purchaser. The manufacturers themselves are confident that a market segment for their products does exist in this country.

  A BMW official said: 'India has more dollar-millionaires in comparison with most countries in this region and there is a sizeable market for high-performance luxury cars. With the opening up of the Indian economy, there will be more wealth, and hence more customers will be generated.'    Robert Cassidy, a regional manager for Jaguar Cars, agreed. 'This is just the right time to come to India,' he said. 'There are very few countries left in the world that offer the potential and volumes to make Jaguar's entry feasible.'    Mr Cassidy said he hoped to sell at least 100 cars a year in India, and that, with good marketing, sales could be as high as 200.

   Rolls-Royce's targets are much more modest. Derek Davies, regional manager of the company, said: 'We are looking to sell 10-15 cars in India initially. We are also considering importing a few used Rolls-Royces, which would be cheaper.'    Neither Rolls-Royce nor Jaguar has plans to set up manufacturing facilities in India, or even joint ventures. They will function through authorised distributors, who will also be responsible for after-sales service, repairs and spares.

   Ironically, the plans of these luxury car-makers have unfolded at a time when what passes for a luxury car market in the country is showing signs of fatigue.

   What has all along been considered a luxury car in India is the five-seater model in the 1,300-1,600 cc category, costing between 500,000 and 700,000 rupees. At the moment, three such vehicles are available - the 1,300 cc Esteem by Maruti Udyog Ltd (MUL), the 1,500 cc Cielo by DCM-Daewoo Motors, and the decade-old 1,800 cc Contessa by Hindustan Motors (HM).

   The existing models in this segment are soon to be joined by two more - the 1,600 cc Opel Astra from General Motors-HM and the 1,300 cc Peugeot 309 by PAL-Peugeot.

   Four other car makers are in the process of setting up facilities to produce medium sized cars in the country. Ford plans to launch the Escort, Hyundai of South Korea the Accent, Honda the Accord and Mitsubishi the Lancer.

   What was a seller's market until the end of 1994 has turned full circle, thanks to the wider choice which has become available.

   An indication of stagnation could be had from MUL's decision to drop the idea of increasing production of the Esteem from 45,000 to 75,000 in this financial year.

  R.C. Bhargava, managing director of MUL, said: 'I don't think we would be able to sell more than 45,000 Esteems in a market segment that is becoming distinctly overcrowded.'    Mr Bhargava said future action might be concentrated in the lower segment of four-cylinder cars in the 900-1,000 cc range - in which MUL's Zen model (sold abroad as the Suzuki Alto) is a player. Fiat's Uno model has just made an entry in this segment, and collected 180,000 bookings in January alone.

   'Many of our three-cylinder, 800 cc car owners are graduating into the higher segment,' he said.

  There were 185,000 bookings for the Zen when the list closed in January. Incidentally, MUL had collected a record 290,000 bookings for the Esteem in October 1994. More than 50 per cent of these were subsequently cancelled, the company said.

   Car-industry analysts predict that there will be no shortage of incentives and sops doled out by car companies by the end of this year.

   Of course, those who want to flaunt their Rolls-Royces, BMWs and Jaguars as symbols of 'having arrived' may not need to be so assiduously wooed. Their avaricious gazes at the glittering beauties during the Auto Expo spoke volumes.



Manufacturers find newly rich eager for a mobile wealth symbol