India?s luxury class is a fast growing tribe. Consider this. Sales of luxury cars?priced above Rs 20 lakh ($45,000)?in India went five-fold in four years, from 1,000 units in 2004 to about 5,000 units last year. And the numbers are is to rise, thanks to the slew of launches lined up and expansion plans that luxury car makers like Mercedes-Benz, BMW India and Audi have in place. Rising incomes and a young population eager to flaunt its wealth would further fuel the demand for luxury car s in India. Estimates show sales of luxury cars this year will cross the 6,000 units, a growth of over 20% over last year.

Swearing by the local market is Benoit Tiers, managing director of Audi India. ?With the improvement in infrastructure and high ambition levels of the younger generation, we believe that sales of luxury cars will increase dramatically. The segment has seen 200% increase for us, and this year sales are expected double.? Tiers says the Indian automotive industry has evolved in the past few years, especially the luxury car segment, which is one reason for several manufacturers to enter the market.

Apart from new models, including the new Audi A4 sedan launched in July this year, the luxury carmaker is now expanding its dealer network at a fast pace. The company has recently set up five new dealerships, in Ahmedabad, Chennai, Kochi, Kolkata and Ludhiana, taking its dealer network to 12.

From 105 units in 2005 and 350 units in 2007, sales of Audi India went up by 163% in the first seven months of this year at 595 cars as against 226 cars during the same period last year.

The boom has also prodded BMW India to revise its sales target for this year. The company, which had estimated sales of 2,000 units in 2008, has now revised up its target by 40% to 2,800 units. In the first six months of this year alone, the company has sold 1,563 units compared to a total of nearly 1,400 units sold last year. The company is also mulling coming up with a hybrid vehicle in the next 18 months.

Another major driving force of all these luxury brands is the rising number of high net worth individuals in India. ?There has been a growing trend of high net worth nuclear families, where both husband and wife are making big bucks and with no major liability on their shoulders. Such class of people like to splurge on these high-end brands that help them upgrade their status,? says an industry expert. According to estimates, India had 1,23,000 millionaires in 2007, up by more than a fifth from the previous year, the fastest growth in the world.

?Over a period of time there has been a change in perception. Till a few years back, people preferred parking their money in real estate or in gold. But know Indian buyers want to show they?ve arrived, and luxury cars are seen as very desirable status symbols. Moreover, with the mean age of car ownership in India coming down from 38 years to 35 years now, consumers are now willing to stretch themselves and splurge on luxury products,? he adds.

Even top-end brands like Rolls-Royce are banking on the growing

Indian demand for luxury cars. The company is in the process of expanding its product portfolio in the country and will launch the Phantom Coupe, the last in the Phantom series, in India in November. The vehicle would be priced at Rs 3.5 crore.

?We are working on an additional range of cars, which will allow us to expand the brand further. The new family will not compete with the Phantom, but it will be the second most expensive car in the world, priced below Phantom,? says Graeme Grieve, director (sales & marketing), Rolls-Royce Motor Cars, adding that the new vehicle will be launched in India in the middle of 2010.

The company, which re-entered India in 2005, has since sold about 30 cars, including 12 units last year. ?This year, till the end of the third quarter, we have sold 12 cars and we hope to touch 16 by 2008-end,? Bennett adds.

According to a recent study by JD Power & Associates, luxury cars are the fastest growing segment in the Indian automobile market, albeit from a low base. Though the numbers are small, India is quickly catching up with its wealthier neighbours. India?s luxury car market is likely to edge past Thailand and draw level with Malaysia this year, and will soon overtake Singapore?s sales of about 10,000 units a year, the study estimates. However, this is still a far cry from China, where luxury car sales are seen rising by a fifth this year to about 2,33,000 units.