For luxury carmakers, next boom is in sub-Rs 25L space

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Firms line up models for bigger share at the bottom of the pyramid

BMW India has aggressively sounded a battle cry to consolidate its numero uno position in the premium and luxury car market with its new product portfolio and investment over next year to take on rivals Audi and Mercedes-Benz. But, auto analysts believe that the three will fight it out for leadership in the sub-Rs 25 lakh premium car market by the end of next year.

Philipp von Sahr, president, BMW group India, told Financial Chronicle that his new product portfolio includes generation X1, new 7 Series and a premium compact hatchback 1 Series over next year to maintain its leadership position. He said a range of desirable product portfolio and investment in brands is the planned strategy for the coming year to stay ahead.

The BMW launches are well timed to counter the launch of Mercedes-Benz’s A-Class and Audi A3. Auto analysts said there is going to be a battle in the small compact premium car market between Rs 20 and Rs 25 lakh bracket by the end of next year.

“Be it Mercedes, BMW or Audi, none of them want to miss out on the numbers at the bottom of the pyramid of the luxury market. All three are planning to penetrate the Rs 20 lakh segment with a variety of body styles,” Shrawan Raja, auto expert and managing editor at told Financial Chronicle.

Mercedes-Benz’s A-Class launched globally in September, which clocked over 70,000 bookings is slated for the Indian market next year priced below Rs 20 lakh and the carmaker is also mulling to bring in sports utility vehicle (SUV) as well as the compact sedan based on the A-Class platform. Its popular B-Class, a compact sports tourer, launched in November 2011 had sold 75,000 units globally and the 250 units allotted to India were sold out priced at around Rs 21.5 lakh. “We have planned a range of new products in the premium segment, which is registering a good growth in India,” Debashish Mitra, director, sales and marketing at Mercedes-Benz India, told FC.

He said the company is also planning to gradually produce most of its cars locally in Pune, where it began local manufacturing its new M-Class 250 CDI SUV priced at Rs 46.64 lakh (Maharashtra).

Audi is also studying the market for the launch of the A3 sedan in 2013, which was exhibited at the 2012 Delhi Auto Expo as a concept. The A3 hatchback made its public debut at the Geneva Motor Show back March and sales began in Europe and the UK in September.

“The new models from the German majors may not offer famed big boot, powerful engine, off-roading prowess or rear seat cosiness, but they might come with plenty of style, snob value and with the edge in brand muscle. Even the Rs 20 lakh segment customer today wants variety as young buyers who are the prime target of these luxury brands desire rides that match their personality,” Raja said.

Auto analysts said the India’s 23,000-units luxury car market has been growing at a compounded annual growth rate (CAGR) of above 30 per cent over the last few years. While BMW edged out Mercedes-Benz from the leadership position in 2009, it has been facing the heat from Audi.

While BMW sold a total of 7,389 cars between January and October, Audi sold marginally less at 7,267 units during the same period. Mercedes-Benz is a distant third at 5,950 units in the same period.

Luxury cars in India account less than two per cent of the 2.2 million car market. It grew just nine per cent in the first six months of this calendar year, with sales of around 12,000 units compared with 35 per cent growth in the same period last year. Analysts estimate this market to grow four-five per cent by 2020.

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