The automotive sector in India bled profusely last year as it saw its sharpest decline ever. Vehicle sales and job losses along with cost-cutting measures and slowing investments turned out to be a big concern for the sector. Amid this negative scenario though some companies managed to outperform their previous performance and set new records as well. Most of these stellar performances were expectedly limited to the luxury and ultra-luxury segment, which is where Lamborghini comes into the picture. One might think that Lamborghini sells just a handful of cars in India and the market hence is of little importance for the Italian brand but that would be totally wrong. In order to get a clear picture, we spoke to Sharad Agarwal, Head, Lamborghini India on the sidelines of the Huracan Evo rear-wheel-drive launch in Delhi.
Express Drives – In the wake of the downturn many feel that a lot has been said and promised by the government but not much is happening on the ground. What’s your view?
Sharad – The problem is that every policy requires some time to show the results. Corporate tax, for example, is a long term thing and doesn’t give you results immediately. Hence, what we expect is something that can be done to boost things immediately.
How did 2019 go down for Lamborghini India?
2019 was another record year for us despite all the challenges that we are seeing in the market including the super-luxury segment declining by 18 to 20 percent. Despite this we registered a positive growth and Lamborghini grew by 15 percent last year from 45 cars in 2018 to 52 in 2019. What gives us pride is the fact that despite these challenges, we are still one of the brands that have managed to register positive growth. That said, we are going in the right direction and we always say that whatever we do in business, our future growth is driven by two pillars. First, what we do as a company and second, what happens in the external environment on which we have a very limited influence. When you have external environment supporting you positively, you grow at a very fast pace. When it is not supporting you, growth still comes through but at a slow pace. So if you look at our history, we have been growing consistently as a company despite the fluctuations in the market and have maintained our pace.
Which is the star performer in your model portfolio?
The Urus is leading the growth and today it is contributing over 50 percent of our business in India. What we also see is our future growth driven by Urus because that segment of buyers is also growing and is helping us grow. Interestingly, Urus is accounting for over 70 percent of first time Lamborghini buyers. Urus is bringing buyers from segments such as luxury sedans, premium sedans, luxury SUV segment and is also helping the super luxury SUV segment to grow. Urus will continue to be our growth driver because it is more suited for India.
We have a lot of challenges and we look at our sportscars when the cities are getting congested, the traffic and the infrastructure, so it is really challenging to enjoy a sportscar in that kind of environment and that is why the growth is limited. However, with the Urus, you get the best of both worlds. You get the versatility of an SUV and the dynamics of a super sports car.
In fact, 2019 has been a record year because we established some new records. We delivered the 50th Urus which means we are delivering an Urus almost every week. We also got the Aventador SVJ63 which is one of the 63 cars in the world. So this is indeed something very special for India because if we go by our standard process of allocating cars to the market, India will never qualify. However, we decided that India being a strategic market, we should allocate one unit to India and create more excitement among super sports car owners and enthusiasts.
You said that India is a strategic market so on a global scale, where does India fit in and what kind of growth and volumes you are expecting in the mid and long term?
Presently, India accounts for less than 1 percent of our global sales, so it is very small in terms of numbers. However, if we look at market in terms of strategic numbers, we look at what we are doing today and we look at the potential of the market in the medium to long term. We strongly believe that India definitely has a huge potential to grow, because it has a rapidly growing population of billionaires at a consistent rate.
The kind of trend we are witnessing in the market, we are not just limited to metros, we are now selling in tier 1 and tier 2 cities as well. Moreover, Lamborghinis are not limited to 2nd 3rd generation of wealthy families, we are seeing 1st generation entrepreneurs buying our super-luxury cars now. This trend makes us believe that India will grow as a market and we are working towards it. The other growth is driven by external environment so we are waiting for this external environment to get better and given that we are doing the right things, we are definitely going for an exponential growth.
The position of the brand is very strong in India as we are leading the super-luxury segment in India and this kind of trend we still don’t enjoy in many markets. If the external factors support us, India will move to the top ten markets in the next 5 to 6 years.
In the last few years what have been the key challenges in the Indian market?
One of the key challenges that we always face in India is the erratic change in taxes and structure. Whenever there is a change in the taxation, there is a consumer segment that either postpones their purchase or drops their plans and this doesn’t let the segment grow at a consistent pace. Fortunately, for the last 2 years, things are stable and our requirement is not to ask the Government to charge us less but instead provide consistency first. If price points are changing every now and then, people are not ready for it and it does not let the segment grow.
Another challenge is obviously the infrastructure. While we see a lot of developments happening, we still see urban congestion as a major challenge and if over a period of time things improve, it will obviously help the segment to grow because people want to drive and enjoy these cars. The current slowdown isn’t exactly a challenge because I still see India as an opportunity because the economy has to grow. It’s a temporary phase and I think India will be back on track. India will grow in the long term and there is no doubt about that.
When you talk about the potential of the market, what numbers do you have in mind for the next 10 years?
For the super-luxury market in 2018, there were about 315 cars and in 2019 it has come down to 260 cars. However, if you look at the size of the market and the number of billionaires in the country, this market is definitely not a 300 car market.
This market is much bigger so the growth potential is there and at some stage, it has to reach a tipping point from where it has to start growing at an exponential rate. When will this happen is a question that is difficult to answer at this stage but if one were to ask about the size in next 10 years I’m sure super luxury car segment will go through a phase where it will see exponential growth and will be more than 10 times larger from the present size.
What is the status of the network right now in India?
We have three partners – Delhi, Mumbai and Bangalore. One of the key reasons of our success in India is to have the right partners. You need partners not just who understand long-term luxury but also have a long term vision and to understand that this segment is not easy as customer expectations are different and there are challenges as well. We have recently upgraded our infrastructure in all the three cities because we are growing. We have recently opened new experience zones with renewed experience for our customers.
What about service issues for customers outside these three cities?
We understand this concern but a lot of our demand is coming from tier 1 and tier 2 cities. We have prepared ourselves to handle the maintenance of these cars in these cities. We have multiple innovative programs. If required, we can fly down our international technician in addition to our after sales team in India which is competent to meet any technical requirements. We have a concept called flying doctors so for example if you are in Indore, and there is a challenge, our guy will be there through the fastest mode of transport.
In addition, the quality of cars is so great that the car needs to come to the service center once a year. So maintenance is absolutely not a concern while buying a Lamborghini. A testimony of this customer faith i sthe fact that we have sold cars in North East as well.
What is the car park for Lamborghini in India?
We have crossed over 250 cars in India and now we are adding at a faster pace. We will soon be delivering the 2nd Huracan and delievered the first almost 6 months back. Within six months, we have the 2nd car going.
Lamborghini is also known for doing special edition cars. Can we expect India to be on that list anytime soon?
We do special editions but we don’t do market specific special editions. What’s more important is that we have special editions that are done globally and we see them coming to India.
How different is the Indian buyer different in terms of customising the car compared to a regular, say European buyer?
In terms of buying preference and customisation, you can compare the Indian buyers with buyers from any of the mature markets in the world. They are evolved, love to customise their cars and give it an extension of their personality. We’re proud to say that every Lamborghini you see in India is different. You may see 10 yellow cars but when you go close to the car, you will see the differences. So the buyers are evolved they don’t want to buy just a Lamborghini but they want to buy their own Lamborghini.
