NEW DELHI: Beleive it or not, according to the head of a luxury car maker, their expensive vehicle sales are being impacted as a large number of Indians continue investing in mutual funds (MFs) schemes through systematic investment plans (SIPs) and prefer to park a part of their monthly saving rather than invest in a high-end car.

This particular concern was expressed by Santosh Iyer, currently sales & marketing head of Mercedes-Benz India and who is likely to take over as the CEO and MD of Mercedes-Benz India soon, in a recent interview to The Times of India in which he went on to say that SIPs were their competitors. His marketing direction to his team is that if they were able to break this cycle of SIPs then they would see exponential growth.

Iyer claimed in the interview that, unlike the West, India has a strong savings mindset owing to weaker social security measures and Indians end up savings for themselves and their kids.

Although Iyer is correct in the sense that during and post-pandemic, Indian investors did shift their fund allocations to SIPs in a large way, however, the experts we spoke to said that the concern raised by the car maker was not technically valid.

Illustrating an example, financial expert and investment advisor Amit Bhrambhatt said that in his experience out of the total monthly savings within the middle and upper middle, class investors the range of allocation towards SIPs ranged from anywhere from Rs 2,000 to about Rs 50,000, while an average EMI of an upper-end car like Mercedes may well be in the range of above Rs 50,000 per month. 

"So it essentially means that the consumer for a luxury car would be a high net worth investor, individual or a business owner who can anyways afford the EMIs on that car, in that respect, I do not quite agree with his statement," Amit said, adding that the fact that sales of luxury cars including that of Mercedes are on a rise since pandemic. 

On the comparison between car sales based on savings trends in India vs saving in Western countries, another financial expert, especially dealing in SIP products said that comparing these two trends would be really correct since in the west people usually go for a vehicle through hire purchase or a lease model where they are able to change the car every few years, without making a large investment in excess of say Rs 40 to Rs 50 lakhs in India and even the downpayment would be equally large.

He added that the main concern of luxury car makers would be the high input cost, custom duties and even the higher tax brackets that are levied on their vehicles as compared to a low-end car.