BMW and Mercedes attack India


Though ballooning inflation and dipping growth prospects are slowing the economy, Germany’s BMW and Mercedes-Benz are betting big on Indians’ voracious appetite for luxury cars.

While BMW has lined up a series of launches in new and existing segments, new sales initiatives and a capacity enhancement plan that can effectively double its production in India, Mercedes-Benz is gearing up to unveil new products and facelifts next year, largely aimed at sprucing up consumer sentiment and continuing with the growth trend.



Unfazed by the broader sluggishness in the passenger car market and riding on its stomping growth of 70 per cent year-to-date,

BMW, the biggest manufacturer and seller of luxury cars in India, is launching a luxury convertible next month. The Munich-headquartered company is likely to launch the Mini range of cars in the first half of next year. Though the sizes of the models are as big as Maruti’s Swift, they will cost four times the price of a Swift.

BMW India president Andreas Schaff says, “It’s the base segments that are the worst affected (by the slowdown), as buyers of these cars are more price-sensitive than those of luxury cars. Our buyers are extremely wealthy, so less dependent on macro-economic activities. We had put up targets for this year and almost every month, we have outperformed the estimates.”

The company sold 8,042 units in January-October, compared to 4,741 units in the same period last year, according to the Society of Indian Automobile Manufacturers (SIAM).

The growth has prompted BMW to explore adding another shift at its assembly plant in Chennai, in addition to a supplementary assembly line, which will raise productions significantly from the present levels of 10,000 units a year.

Mercedes-Benz, former leader of the luxury car segment in India, is likely to launch two-three new models next year. While its second-highest selling model in India, C-Class, is likely to get a facelift, the R-Class crossover may get a diesel engine.

It is confident of clocking sales of 7,000 units this year, 25 per cent more than last year. Sales in January-September grew 23 per cent to 5,634 units, according to SIAM.

Mercedes-Benz India managing director and chief executive officer Peter Honegg says, “We will achieve our targets this year. We will sell around 7,000 units this year, compared to last year’s sales of 5,600 units. It’s definitely above our internal targets.”

Anticipating a trend towards diesel models, Merc has started increasing the supply of such cars since January. This is one of the reasons why the slowdown has not impacted the company. “We have changed our product portfolio in the direction of diesel. Earlier, we used to sell 30-40 per cent petrol products. Now, the share of petrol is just 20 per cent. We are offering more and more diesel products. The first five-six months the market will be flat and, then, we will come back to a normal growth rate next year,” says Honegg.

The high growth rates for BMW, Mercedes and Audi (Audi grew 92 per cent by selling 4,718 units in January-September) have come at a time when passenger car sales overall have declined by five per cent (April-October). Honegg says, “It’s not that we are not impacted at all. There has been high growth rate in the first six months and then, in the second half, the growth rate has been shrinking, though definitely not to the extent of the total market.”