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a strong market for luxury cars despite slowdown, says BMW

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a strong market for luxury cars despite slowdown, says BMW

A few years ago spotting an exotic luxury car on India’s rusty roads was a rare sight, but in the last five years, international luxury carmakers have been chasing the affluent with their dynamic design and comfort. This market in India is growing at a fast pace, with increasing demands from the young population. The spending on these cars is growing more than jewellery and electronics.

There have been many launches of luxury cars in 2013, with German car-maker Audi launching Audi R8 V10 Plus after the launch of new Audi R8 V10 in January, along with a couple of more launches.

In September, BMW launched the new 1 Series compact luxury hatchback, and yesterday the brand also launched the new BMW 5 Series, which is locally produced at the BMW plant in Chennai in diesel variants. Speaking on the occasion, Philipp von Sahr, President, BMW Group India said, “The BMW 5 Series is the ‘World’s most sought after executive sedan’ and has played a major role in the company’s success globally. The BMW 5 Series is one of the core models in our product portfolio in India and accounts for over one third of our local production in India. With the launch of this model update, we will continue with the amazing success of the best-selling sixth generation of the BMW 5 Series.”

BMW has aggressive marketing plans to promote the new 5 Series this festive season. Digital also plays an important role for BMW. Sahr believes that there are a lot of reasons to come into the BMW showroom this festive season because of the launch the new 1 Series and the 5 series, followed by another launch in November.

The demand for luxury cars is no longer restricted to the metros any more. Tier II and Tier III cities have a growing hunger for them as well. Hence, the brand is planning to enhance its dealership network to reach newer customers and would take its dealer strength to 50 from the current 35.

“We are reaching the smaller cities through mobile showrooms that would represent the style and class of BMW. The cars are available for test drives for the customers. This is a very good way to learn about the city and the preferences, which helps in making the right decision on whether it is worth opening a showroom in that city,” Sahr added.

The automobile industry has been worst hit by the economic instability. The slowdown and the depreciation of the Rupee have dampened the auto industry.  The Indian auto sector is facing a second consecutive year of decline mainly due to rising fuel prices and high interest rates. According to estimates, there has been a sharp deceleration in car sales from April till September.

Sahr pointed that the slowdown in the economy along with the developments in the exchange rate has affected the company. “We had to increase prices twice this year – once in January and then in August, and the competition followed us.  Our customers understand that we had to do it to ensure profitability,” he added.

On competition from leading brands such as Audi and Mercedes, he pointed out that the competition has not hit their sales. “Our brand has a clear premium strategy to ensure profitability and growth. We don’t believe in providing discounts like our competition in the premium segment because it damages the brand. I agree we have a higher price positioning than our competitors, but we have better premium products also,” Sahr stated.

Despite the downturn in the economy, the company is strongly committed to the Indian market. Sahr said, “We are investing up to Rs 3.9 billion by the end of 2013. The second assembly line is in the process of setting up. By the end of this year, we will have seven different products produced in our plant in Chennai.”

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