Luxury car makers lining-up small models to boost sales

The current demands of the Indian auto industry have induced big players of the luxury car market, such as Audi, BMW and Mercedes-Benz, to introduce small cars with an aggressive price range of Rs. 20 to Rs. 25 lacs. This strategy will also augment the brands’ sales volume in the country. The industry experts are expecting that over 300,000 premium cars will be sold till 2020. A recent growth in the economy has increased the number of high income households and thus, the industry expects a surge in the sales of luxury cars in future. V. G. Ramakrishnan, Senior Director (automotive and transportation), South and West Asia, Frost and Sullivan said, “The penetration of luxury vehicles stands at around one per cent currently. In China, this is four-five per cent, while in developed markets like Germany it is as high as 14 per cent”.

Mercedes-Benz India, 100 per cent owned subsidiary of Daimler AG, was topping the luxury car segment till its strong competitors BMW and Audi launched their cheaper models like BMW X1 priced at Rs. 22.40 lacs and Audi Q3 at Rs. 26.21 lacs. On contrary, the entry-level Mercedes-Benz car, C-Class sedan comes with a price tag of Rs. 31 lacs, which is considerably higher than that of BMW’s and Audi’s models. To regain its lost position, the German auto giant organised a glamorous unveiling event for its cheaper new B-Class Sports Tourer at Buddh International circuit in Greater Noida. The company also has plans to launch its compact A-Class model and premium Sports Utility Vehicle (SUV) GLC in the Indian automotive market. These luxury vehicles are anticipated to be priced between Rs. 20-25 lacs, which may boost up company’s overall sales in the Indian industry.

The strong compatriot of Mercedes-Benz, BMW is also looking ahead to introduce an upgraded version of its 3-series sedan, which will be placed in the compact executive car segment. BMW also has 1-series in its arsenal, which is anticipated to be launched in India by the first quarter of 2013 with a price range of around Rs. 20 lacs.

Other luxury car brands like Toyota, Honda and Skoda have also recorded an increase of 27 per cent in fiscal 2011 by selling their popular models like Fortuner, Accord, Superb, respectively. However, the Indian market has witnessed a modest rise of 10 per cent in luxury car segment in the first half of the current year. Debashis Mitra, Director Sales & Marketing, Mercedes-Benz said, “It’s not only the mass segment that has been hit by the rise in interest rates, excise duties and fuel prices. Our customers are senior corporate executives and entrepreneurs. With the macro-economic conditions affecting industries across sectors, consumers are going in for cost-cutting exercises and postponing purchase decisions”.

The cheaper models from the major luxury brands have been contributing at a higher rate in their overall sales, like the BMW X1 played a major role in boosting the sales of company in 2011. Audi Q3 also witnessed about 500 registrations within a few days of its launch, which made the company rejoiced. These statistics shows the increased demand of cheaper luxury cars in India and thus, forecasted a tougher competition with the upcoming launches of several new small models.