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Mercedes, BMW may miss their yearly targets in India

Mercedes, BMW may miss their yearly targets in India
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First Published: Wed, Nov 09 2011. 09 33 PM IST

Tough track: BMW India president Andreas Schaaf says the firm’s 10,000 target looks like a daunting task. Photo: Satish Kaushik/Mint.
Tough track: BMW India president Andreas Schaaf says the firm’s 10,000 target looks like a daunting task. Photo: Satish Kaushik/Mint.
Updated: Wed, Nov 09 2011. 09 33 PM IST
New Delhi: The Indian arms of luxury car makers BMW and Mercedes will likely miss their sales target for the year because of the slowing economy which has started reflecting in sales of most car makers starting September.
Tough track: BMW India president Andreas Schaaf says the firm’s 10,000 target looks like a daunting task. Photo: Satish Kaushik/Mint.
Interestingly, starting October, BMW India Pvt. Ltd and Mercedes-Benz India Pvt. Ltd stopped reporting monthly sales data to industry lobby Society of Indian Automobile Manufacturers (SIAM) as is the practice for all car makers in the country. Both companies claimed this is on account of a new global corporate policy of not sharing numbers.
Both companies started the year with a sales target of 10,000 cars but may fall well short.
“We are still keeping 10,000 as a target but it looks like a daunting task now,” said BMW India president Andreas Schaaf. “November and December are not great months when it comes to sales of cars.”
A top executive at Mercedes-Benz India who spoke on condition of anonymity said the target of 10,000 looked realistic at the beginning of the year. “The current slowdown did not impact us initially,” the executive said, “but we started feeling the heat by the middle of the year”.
A Mercedes spokesperson insisted that the company is on track to meet its target.
The third German car maker active in the luxury segment here, Audi AG appears to be on course to achieve its yearly target of 5,000 units with sales in the first 10 months of this year reaching 4,700.
“This year is shaping into, what we believe will be, Audi’s most successful year in India to date,” Audi India head Michael Perschke said. “...I am confident that we are well on our way to exceeding our sales targets of 5,000 cars this year.”
In the nine months to September this year, BMW India sold 7,150 units while Mercedes Benz India sold 5,635 units. BMW, which wrested the top spot in India’s luxury car market from Mercedes in 2010 will likely retain that position in 2011. The premium segment continues to grow said BMW’s Schaaf, although he struck a note of caution about 2012. “We are more conservative for the next year. We are not going to see 60% growth in 2012. It will not be more than 30-40%.”
The ambitious target— BMW sold 6,246 cars in 2010; Mercedes, 5,819—may have been prompted by “market sentiment” at the beginning of the year, said a consultant. “This slowdown has forced a lot of people to postpone their purchase decision. The impact of the slowdown was (initially) limited to small cars but in the recent months the premium segment has also taken a hit,” said Abdul Majeed, auto practice leader, PriceWaterhouseCoopers (PwC), an audit and consulting firm.
According to SIAM, the demand for premium cars in the country contracted 11% between April and October compared to a year ago.
“Rising fuel prices and interest rates could hurt anybody,” said Vishnu Mathur, director general, SIAM. “Customers in that (the premium) segment, too, have been hit by this.”
A slowing market has forced dealers to offer discounts and attractive financing schemes.
One BMW dealer is offering discounts up to Rs 200,000.
“There is an inventory build up and that has increased the working capital for us,” said one person who spoke on condition of anonymity. “There are customers who have cancelled their bookings. We are not left with options.”
And Mercedes is offering loans at 0% interest rate for buyers of its C-class and E-class sedans.
PwC’s Majeed said that while there is no doubt in his mind that the segment will continue to grow, companies need to launch models at the right price point to increase their customer base.
amrit.r@livemint.com
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First Published: Wed, Nov 09 2011. 09 33 PM IST
More Topics: Mercedes | BMW | Targets | Premium Cars | SIAM |