How luxury car brands became household names in India?

Summary: With rising disposable incomes and wide availability, now owning a luxury car is became easy with the support of IDFC FIRST Bank Car Loans. Read More..!

15 Mar 2022 by Team FinFIRST

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Only two decades or so ago, premium luxury automotive brands were a rarity on the road in urban India, but since then, they've almost become commonplace. As the economy boomed and disposable incomes ballooned, prestigious luxury cars became a reality for many car buyers, supported by these vehicles' localised assembly and manufacturing. Many factors have contributed to the gentrification of the Indian automotive market:

1. Shift away from an agrarian economy:

Since Independence and particularly since the economic liberalization of 1991, India's economy rapidly transformed from an agrarian to a manufacturing-based industry. With this economic shift, prosperity and disposable incomes both climbed rapidly. An agrarian economy heavily depends on factors beyond human control, such as temperature, rainfall, and pests. A manufacturing economy is more predictable, with higher average returns on investment. As this manufacturing economy developed on the backs of a young working population and government support, disposable incomes expanded rapidly, and big-ticket purchases such as luxury cars became more and more accessible.

2. Skill development:

Alongside the shift away from an agrarian economy, the government invested in higher and vocational education for the country's burgeoning youth population. Easily accessible education, especially in urban areas, combined with the prevalence of English language instruction, led to overall skill development amongst India's urban youth. Computer and English language literacy came together to lay the foundation for a robust IT industry in India. With steady jobs and above-average income, this large service industry population drove the expansion of the Indian middle class, segments of which were affluent enough to buy luxury cars.

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3. Infrastructure:

The growth of manufacturing was facilitated and accompanied by an increase in industrial and logistical infrastructure. Port, railway, airport, and road infrastructure have all proliferated over the last few decades, giving industries the support the need to expand production and revenue. Infrastructure growth also creates jobs and opportunities in the economy.

4. Labour law reforms:

Indian labour laws have also been progressively reformed to increase employment while protecting workers' rights. Labour laws that benefit both the employer and the employee promote industrial growth and, consequently, earnings. Better labour laws also played a role in convincing major international automotive brands to set up shop in India, which helped bring down the cost of these cars for Indian customers.

5. Tax reforms:

Tax rules and reforms have also had a significant impact on India's growth of the luxury car market. High import taxes for these vehicles compelled manufacturers to set up shop in India, which dramatically brought their costs down. With localized manufacturing came easier availability of spare parts and components too. The introduction of GST has also streamlined buying and selling luxury cars.

Luxury cars are prestigious, comfortable, safe, and exciting to drive. New and used luxury cars are well within reach of many car buyers in India now. If a luxury car is on your buy list, IDFC FIRST Bank is right by you to help you with its new and pre-owned car loans. With hassle-free online application and approval processes and zero processing fees, these loans are available at interest rates as low as 7.49% for new-car loans and 10.49% for used-car loans. They also come with flexible EMI schemes, nil foreclosure charges, and tenures of up to 10 years; owning a luxury car has never been easier.

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