Monday, April 8, 2013

Rich alien versus seasoned predators?

Once it was Mercedes-Benz on top. In came BMW and stole the crown. Now, Audi wants a taste of the victory lap on the Indian circuit. Who will win this new round of the war of the luxury cars?

They seem more frequent than the tornadoes that threatened the American and Australian east coasts earlier this month. Only, they are more predictable. Companies, making claims at the slightest hint of an extra booking that helps them edge past their competitor during any given season, is a common sight in the fast growing Indian auto market. Recall the sight of the former BMW India boss Peter Kronschnabl leaping onto the dais at an hour past mid-day, and making a warm claim on a cold winter January afternoon of 2010 on the first day of the 10th Auto-expo in the capital city that his company had become the number one in the luxury car segment in India. [In his case, the excitement was justified to a great extent though.]

The hourglass looks different since that event. Twenty months is some time. And the balance of the game seems to be changing. BMW still leads. True. But its dominance is being questioned, with events waiting to unfold in the Indian luxury car segment.

BMW’s advancement in the Indian luxury market has now for long been tagged a quick kill. It was. BMW was serious about ruling the Indian roads from day one (it entered India in 2006). With such an intent, it caught the-then sleepy giant Mercedes-Benz (and a first mover with a headstart of 13 years) by surprise. Three years is all it took to race past Mercedes-Benz in the Indian luxury car market. In 2009 therefore, Mercedes-Benz India sold only 3,247 units –10.3% less than what BMW India managed that year. In 2010, BMW’s road rage continued. That year, Mercedes-Benz sold 5,819 cars – 6.8% less than BMW did. Even when understood in the light of the fact that the Indian luxury car market is just 10% (in volume) as compared to China’s, the past two years have been a dream run for the Munich-based luxury carmaker. But as we mentioned before, the situation in 2009 was much different than it is today. Then, BMW was selling faster (as compared to Mercedes) across the world too (in 2009, BMW sold 20% more units that Mercedes’ 1 million), and winning the race in India was only an exercise gone right. Today, it has become a habit, and winning on Indian potholed roads has become to say the least – necessary. Why? Fast forward to July 2011, when global figures presented a disturbing sight for BMW. Its sales showed the maximum y-o-y fall in the month – 57% as compared to a much lower 17% for Mercedes (the absolute figures being 130,432 and 125,501 units for BMW and Mercedes respectively). The Indian market is important therefore for BMW for two reasons. First, despite the global setback, India still means a happy hunting ground for the company. In July 2011, the company registered a y-o-y sales unit growth of 57.01% in the Indian auto market, as compared to a negative 16.58% recorded by Mercedes. Second, the India luxury auto market, despite many debates, has proven to be resilient. Numbers are proof. The market grew more than 50% in the first four months of 2011 – as compared to a much lower 5% rise globally. BMW is at it to save all honour and pride. It has a new CEO in the name of Andreas Schaaf and the company has expanded its product portfolio with launches like X1, X3 and the 6-Series convertible since December 2010. But it won’t be easy.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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