On October 15, 2010, the city of Aurangabad made the news for a
peculiar reason. Known for its famous Ajanta caves and below par civic amenities,
it witnessed the highest luxury car sales ever recorded on a single day. 150 brand
new Mercedes Benz rolled out onto the streets, a transaction valued at over 65
crore—every dealer’s elusive dream transaction. Tier II cities are now the go-to places for marketers at
a time when political and economic uncertainty looms large in the country.
While Audi is looking at Coimbatore and Lucknow, Mercedes has finalized on
Raipur and Nashik.
Flaunting high-end luxury cars would be
considered a sin in a country where 350 million people live below poverty line,
but this mindset is slowly changing. As
if reflecting the sentiment the Auto manufacturers, especially in the luxury
car segment, have had a slew of launches at the New Delhi Auto Expo 2012. The
big three in the luxury automobile market—BMW, Audi and Mercedes—are battling
to win the crown of market leader.
Though Mercedes has an advantage of an early
entry as they have been in the country for close to 17 years, their market
leadership toppled in a span of three years by BMW which entered in 2007, a
feat which Audi is not far from achieving. Audi clocked a staggering 83% growth
in sales in 2011 on a year-on-year basis leaving BMW (70%) and Mercedes (31%)
far behind. Between the three, they have sold close to 22000 units in 2011 as
compared to 16000 in 2010 corresponding to a growth rate of over 40%, while the
overall car market has fallen flat with a growth of mere 6%.
Another push factor for the luxury segment is
that it’s reasonably insulated from Inflation. An increase in prices of raw
materials hardly affects luxury car brands. With a price range of over 25 lakh the raw material cost, when added to the selling price, becomes negligible.
The luxury car market has now evolved to a
point where customers are constantly looking for upgradations. This also means
that the used car segment of luxury cars, unthinkable up until three years ago,
is now an icing on top of the cake for auto manufacturers. Mr Micheal Persche,
Audi India Head, expects the used car program to contribute to 10% of the total
revenues of Audi and plans to take it to 25% over a five year period. Audi has also
announced the integration of its used car program “Audi Approved Plus” into its
existing dealership networks across India.
Fortunes for the luxury car market in 2012
are tantalizingly poised with encouraging sales figures in 2011 despite being
shadowed by the global economic uncertainty and fears of a double-dip recession
hitting the U.S. The overwhelming response shown by dealers and component
manufacturers at New Delhi Auto Expo might just prove to be the catalyst that automotive
industry had been longing for.
