The domestic car industry focused on the everyday runabout may have hit a speed bump, having to rely on sops like the excise duty cuts that were extended by six months recently. However, luxury segment vehicles from the likes of Volkswagen’s Audi, Daimler, BMW and Jaguar Land Rover are clocking good sales, growing 15-20% annually. In fact, this segment is on track to deliver one of its highest volumes of over 40,000 units this calendar year, a rise of 38% from a year earlier, according to research body IHS Automotive.
Currently, German carmaker Audi leads the pack with sales of 10,050 units in CY13, followed by Daimler’s Mercedes-Benz which sold 9,000 vehicles. Bavarian car brand BMW comes next with 7,500 vehicles. Even relative newcomer Jaguar Land Rover managed to sell some 3,200 vehicles from just 20 dealerships.
It may be argued that the target audience in this market is impervious to factors like higher interest rates or the affordability quotient. But what has really kept the sales motor ticking over is the introduction of newer models by manufacturers and ramping up of dealerships. And taking a leaf from FMCG firms, they have been quick to spot untapped opportunity in the affluent in tier 2 and 3 towns, reaching those destinations with variants of entry-level models.
So despite rising import tariffs, Mercedes-Benz sales grew 28.5% in CY13 over the previous year, aided in large part by the success of its entry-level hatchback offering, the A-Class, which currently contributes 2,500 in volumes annually. The company is among the leaders in developing its presence in smaller cities, encouraged, no doubt, by the unprecedented 150-car order placed on it by a bunch of businessmen in Aurangabad some years ago. The carmaker has got the pedal to the metal in its attempt to regain the top slot it relinquished in 2009.
“We are well represented in the market with our dealership presence. Even then we are looking at expanding our dealership in tier 2 cities and debut in at least 12 new smaller cities including Bhopal, Calicut, Baroda, Mohali, Lucknow and others in 2014,” said Boris Fitz, vice-president, sales and network development, Mercedes-Benz India.
“Tier 2 cities will bring us incremental volumes. In the past key metros delivered 50% of our total volumes, now smaller cities — Bhubaneswar, for instance — are generating higher volumes. Naturally, we are looking to ramp up