Broadly divided into SUVs, Super luxury saloon, Sport & Coupe’, these sub-segments of super luxury auto mart aren’t called ‘pigments of conspicuous fantasy’ for nothing! Mercedes Benz (representing DaimlerChrysler), which has been the first entrant in India, operates in most of these segments to leverage its strong hold on the market. Apart from C, E & S Classes, rest of the segments are filled by CBU (Completely Built Units) imports.
BMW, on the other hand, is new but like Mercedes has its own assembling plant in India. The Munich based company churns out freshly minted 3 & 5 Series from its Chennai plant, while importing the rest of the model range including the 6 & 7 Series. For now, Volvo & Audi directly import their XC90 & S80 and A4, A5, Q7 & A8 model ranges from Sweden & Germany, respectively. Legendary maker of air cooled sports cars (now back to conventionalism), Porsche sells its entire range in India and that includes the mighty 911 Carrera, Cayenne & Boxter. Interestingly, unlike most of its competitors, Porsche was keener in directly importing its cars from Germany! While speaking on the issue Porsche’s Wills told 4Ps B&M that, “We do not intend to produce or assemble Porsches here as these cars are known and expected to be ‘Made in Germany’.” It is believed that this is perhaps part of Porsche’s strategy as the company competes head on with boutique car makers like Ferrari & Lamborghini (also available in India).
Despite the onslaught of competition, DC India claims that it has doubled its growth rate from last year. Of course, in the saloon segment, Mercedes Benz still holds a dominating position, but seems to be puffing and panting in the SUVs and sports cars segment. What’s more, high end SUVs are fast becoming a rage in India. Accordingly, the handsome Audi Q7 and the ravishing Porsche Cayenne have been doing brisk business here. However, Merc’s SUV – the M Class – is not even doing half the volumes enjoyed by these new entrants. Reason? Mercedes’ lower brand equity when it comes to radically stylish products in the country, or at least that’s what auto analysts unilaterally declare.
Even Mercedes Benz’ convertibles (SLK & SL) have fallen to more specialised sports car makers like Lamborghini & Porsche. Analysts say that India’s young blood is fired more by these fresher brands in India. Further, the ‘driver oriented’ appeal of BMW & Porsche is taking away prospective buyers from conservative branding strategy of Mercedes. DC India may have to brand its cars for the younger generation consumers as well, who are driving the market now.
Apart from these seemingly surmountable difficulties, Mercedes, along with BMW & Audi, is facing another hurdle! Like in the West, even in India, there is a gradual shift toward more exquisitely priced car brands such as Rolls Royce, Bentley & Bugatti! Since the number of millionaires & billionaires in India are climbing, conventional luxury car makers are finding it hard to hold on to the ‘done this–done that’ types. It is becoming increasingly tough to cater to the needs of an extremely small consumer group, especially one not tied down by conventionalism. “Rich Indians have the money and resources to experiment with cars and therefore brand loyalty is not a differentiating factor!” points out Vikram Gaur of The Car Magazine. As of now, Mercedes is playing the ‘quiet opulance’ (uh! unexciting for the younger bunch) card in its communication with consumers; BMW is focussing on driver appeal; and Audi is banking on its innovative streak and selling the Quattro (all wheel drive system) that it has pioneered.
But, for maximum retention, all players will soon have to necessarily deploy multiple branding strategies for respective consumer types. Never mind the obstacles for car makers, these are exciting times for car aficionados in India. Relegated to the status of an insignificant luxury car market for almost 50 years, today India is a battleground for the German elite club. The competitive churn is only adding oodles to the opulent driving dreams of the moneyed Indians. And if George is still nostalgic about leaving DC India’s Pimpri facility, we’d be the first to tell him: “Change is good dear fellow, almost always!”
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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