Even as BMW India aims to hold on to the top slot in the country?s luxury car market, the company?s top official is apprehensive that rivals like Audi are setting a ?dangerous? trend for the premium car market with discounts that could impact profitability.
The Munich-headquartered auto maker is optimistic of closing the year with a marginal increase over last year?s sales figure of 9,371 cars, but says it won?t compete in a price war to increase volumes, even with fellow-German carmaker Audi snapping at its heels.
?For our company, becoming No. 1 means sustainable leadership. You can have a lot of sales allowances and so on to become No. 1, but that?s damaging your brand. It?s nice to have good sales figures but not for any price,? said Philipp Von Sahr, president of the BMW Group in India.
?This is also, I think, a very dangerous situation for the premium manufacturers if they go too much with sales allowances and discounts and come into the price level of the volume manufacturers. We will increase our prices, maybe then the volume goes down but we want to be profitable.? BMW, like most other car manufacturers, has said it will hike prices by 10% in January.
Audi, which has also announced a 5% increase in prices, has been vocal about its plans to become the top luxury car brand in India by 2015. It recently said it surpassed its target for the year with 8,072 cars sold between January and November, the sales growing at 58% over the previous year.
?Market-share is not the first thing that we look at. Of course we look to it that we sell our cars and that we have profitable dealerships,? said Von Sahr. ?In January or February if someone gives a lot of discounts and is ahead of us, then it is nice for him. But it is really not what we are looking for.?
While it is common for carmakers to offer discounts on older models, it also widens the price gap with the incoming model, said Deepesh Rathore, MD India, for IHS Automotive. ?Various manufacturers have at one time or the other offered discounts to improve volumes,? he said.
BMW, which opened a new showroom in Bangalore on Thursday, also plans to start assembling the new 7 series and 1 series models from its Chennai plant next year in addition to the four models it currently assembles there.
