New Delhi: BMW and Audi may soon emerge as the two main rivals for the top slot in the Indian luxury car market, leaving Mercedes in the third spot, following a global pattern.
This would overturn the existing local pecking order, which sees Mercedes-Benz India Pvt. Ltd and BMW India Pvt. Ltd as the two top rivals, especially since the first company’s brand name has a longer pedigree in India and it was the first to set up base in the country. Of the three German car makers, Volkswagen-owned Audi is the most recent entrant into India.
While BMW and Mercedes have witnessed a sharp double-digit decline in the April-June period, Audi has emerged as a clear No. 2, ahead of Mercedes by at least 700 cars, according to the data from the Society of Indian Automobile Manufacturers (Siam) lobby group.
Audi is just 200 units behind market leader BMW and could equal or overtake it by the end of this fiscal year. Globally, BMW leads the luxury car market followed by Audi. On 7 July, Reuters reported that Audi aims to become number one globally by the end of this decade.
“Audi’s sales have been helped by the launch of the Q3 and the A4,” said Mahantesh Sabarad, senior vice-president, equity research, Fortune Equity Brokers Pvt. Ltd. “The new A4 has become very popular purely because of its design and aggressive pricing.” In the first three months of this fiscal, BMW sold 2,088 units, down 12.16% from the year earlier, Audi sold 1,908 units, up 50%, and Mercedes sold 1,257 units, down 24.41%.
The three car makers haven’t been reporting monthly sales data to Siam for the last eight months, citing “competitive” reasons. “It was not only to us but to all the other auto bodies internationally,” said a top Siam official on condition of anonymity. “Now they have agreed to give us cumulative sales data of three months at the end of every quarter.” Sabarad said: “In the Indian luxury car market, it’s all about the function of new models being launched. The consumers are more excited about new cars rather than anything else.”
It would be foolish to count Mercedes out of the race, said Pradeep Saxena, executive director, TNS Automotive, a marketing research firm.
“There is a general perception that people who are well-settled in life buy Mercedes, while Audi is for the young crowd and BMW buyers are mostly middle-aged people,” said Saxena. “If we go by that logic, India will have more number of people who are old and rich and that age group will have sustainable growth. So, to count out Mercedes will be a mistake.” The competition in the Indian luxury car market is likely to intensify further with Mercedes launching its B class hatchback by the end of this year and A class small car by 2014.
“Moreover, it will be coming up with a competitor (the GLC) to Audi’s Q3 and BMW’s X1,” said an expert with a leading consulting firm requesting anonymity. “The real game will start then but in the meantime Mercedes may lose some momentum.” The GLC, Q3 and X1 are entry-level sports utility vehicles.
Audi, too, is expected to bring in SUVs such as the Q2 and sedans such as the A3 and A1. BMW will look to introduce a refreshed version of its 3 series and its entry-level 1 series sedan by the end of this year.
Sabarad said that the luxury car market in India will be 6-8% of the total car market by the end of this decade from less than 1% now. “If you look at all the developed markets—Europe, the US or China, the luxury car market accounts for 5-8% of total car sales,” said Sabarad.
“India will also follow the same course with purchasing power going up and these companies trying to penetrate deeper into the Indian market.”