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India’s High Net Worth Watch - $500,000 Autos and Status

India’s High Net Worth Watch - $500,000 Autos and Status

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Published by Mark Fidelman
On our India wealth watch report we note that Cruise Norway’s Antarctic voyages cost as much as $10,000 an expensive proposition for anyone. It’s interesting however, that Indians have been perusing the company’s website by the thousands thus prompting the cruise line to act. In the past, only the extremely wealthy could dream of spending their disposable income on a $10,000 boat trip.
“We were gett
On our India wealth watch report we note that Cruise Norway’s Antarctic voyages cost as much as $10,000 an expensive proposition for anyone. It’s interesting however, that Indians have been perusing the company’s website by the thousands thus prompting the cruise line to act. In the past, only the extremely wealthy could dream of spending their disposable income on a $10,000 boat trip.
“We were gett

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Published by: Mark Fidelman on Aug 03, 2007
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05/08/2014

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India’s High Net Worth Watch - $500,000 Autos and Status
On our India wealth watch report we note thatCruise Norway’s Antarctic voyages cost as muchas $10,000 an expensive proposition for anyone.It’s interesting however, that Indians have been perusing the company’s website by the thousandsthus prompting the cruise line to act. In the past,only the extremely wealthy could dream of spending their disposable income on a $10,000 boat trip.“We were getting so many hits from India that we felt that there was a market here,” saysJohn Ambat of Cruise Norway, which has now opened offices in several Indian cities.“Indians were booking suites and the most expensive cabins.”While India’s share of the global luxury market is still small, these small signs of spending largesse add to the growing trend of high net worth Indians looking for ways tospend their hard earned money. The luxury trend is being noticed by companies such asBang & Olufsen (high end audio equipment) and fashion designers Escada and Brionihave recently opened shops in New Delhi and Mumbai, joining Fendi, Versace, Chanel,Louis Vuitton, and Valentino. Ermenegildo Zegna (luxury clothing retailer), has launchedthe India’s largest luxury store, a 3,000-square-foot shop at the Taj Mahal Palace andTower Hotel in Mumbai.Car makers Bentley, BMW, Maybach (Mercedes) and Rolls Royce are openingdealerships in India which actually surprises me since the roads are very bad in India. Ican’t see maintaining those cars (a Bentley cost almost $500,000 in India) in anymeaningful way. Those that are buying them must have disposable income because itwill be very expensive to fix the cars due to the lack of qualified mechanics and access to parts. Can you imagine having only one place (the dealership) in the country to fix your car? The dealership will be able to charge any price they want since in the short termthere will be a lack of competition.It’s estimated that 1 million Indians buy luxury products and services. Another 8 millioncan afford to buy the same services, but many either don’t want to show off their wealthor don’t recognize the benefits of Western style luxury goods.Therefore luxury sellers will have to spend a lot of time building their brand image andadvertising the luxury goods and services in such a way that makes high net worth(HNW) Indians feel motivated to spend high amounts of money. Like any emergingmarket, many of the newly wealthy like to “advertise” their wealth by buying expensivecars, clothing or jewelry. HNW’s also recognize that using their wealth can buy status
 
and in India that means power, influence, and social cachet. This trend will increasinglyhappen more in India, but we’re still at the very early stages."India tends to be very status-conscious," saysRaman Mangalorkar, a consumer market analystin Mumbai for A.T. Kearney (global managerialconsulting company). "A subtle hierarchy getsestablished in one's mind and people usethese symbols to put themselves in differentlevels of standing."As India's middle class increases in wealth andis exposed to more Western products andservices, it will increasingly seek to copy the buying habits of wealthy Westerners. We’re seeing that trend now, but the IndianGovernment’s restriction on foreign single brand retail is slowing progress.In a recent study, Global Consulting firm McKinsey discovered the following trends:•Overall Indian consumption will triple by 2025, and 80 percent of the spending willcome through income growth.•Spending across all economic segments is up 40 to 50 percent.•The global class of consumers, who buy top-branded and luxury items is expected togrow tenfold by 2025 to 23 million.The first Electronically Traded Fund (ETF) to follow this trend is Claymore(NYSE:VOY) (NYSE:CZC) (NYSE:RYJ) /Robb Report Global Luxury Index ROB.Claymore Securities based the ETF on an index created by CurtCo Robb Media, publisher of the Robb Report, a life-style magazine catering to the ultra-rich.The smart money will follow the trend “a rising tide floats all boats” and make strategicinvestments in equities and real estate to capture higher returns. Moreover, the HNWeconomic class rarely stops spending money in slow periods of growth (in fact itincreases in some cases due to lower prices) so finding the right investment mix to followthis trend will do you well over the long run.- The Editor 
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