Mercedes Ups Ante in India’s Luxury-Vehicle Market

MUMBAI – Defying the Indian auto market’s 2-year slump, Mercedes-Benz achieved double-digit growth in 2013. Despite losing momentum this year, the automaker is countering with no fewer than 10 new-model introductions and a growing sales network.

Deliveries of the automaker’s super-luxury compact cars, led by the new A- and B-Class models priced about Rs2.3 million ($37,700), climbed 16.4% to 7,110 units last year, according to WardsAuto data.

The attractive price was offered without compromising on quality or performance, or with the discounts premium automakers try to avoid to protect the brand’s value. Manufacturing costs were lowered by increasing parts sharing across a wider range of models and adopting efficient cost-management strategies.

Audi and BMW India outsold Mercedes in 2013 on a unit basis – 9,340 and 9,320, respectively – but Mercedes enjoyed double-digit growth while Audi sales increased 5.4% and BMW volume rose 3.4%.

The market has slowed considerably this year, however. Audi, BMW and Mercedes light-vehicle sales through August all climbed just 1.0% year-on-year, WardsAuto data shows.

Mercedes intends to get back on course with the GLA-Class, a compact SUV based on the entry-level CLA sedan that collected 500 bookings in 18 days. SUVs claimed a 25% share of the approximately 35,000 premium-luxury models sold in India in 2013. The GLA, priced at Rs3.2 million ($52,450), is expected to grow that share to 33%.

The German automaker has introduced eight new light vehicles since January, and two more models are due before year-end.

Audi has answered Mercedes by rolling the A3 and Q3 compact light trucks and BMW has launched its 1-Series, 3-Series and X1 compacts. They could not match Mercedes’ prices, but their sales for the year’s first eight months were higher, as Audi delivered 6,340 units and BMW, 6,310.

Mercedes-Benz India’s 20-year presence in the country has not given it an advantage over relative newcomers such as Audi and BMW. Its lineup of large, conservatively styled models was derided by the media as “old man’s cars.”

That is changing, CEO and Managing Director Eberhard Kern says: “We are getting closer to our customers. We have exclusive cars for the young and the successful executives. Last year we were dubbed as selling fathers’ cars. We are now selling sons’ and daughters’ cars.”

Mercedes is drawing on its strengths in other areas as well, establishing AMG Performance Centers in Delhi, Mumbai and Bangalore. It has promoted the AMG Driving Academy, which allows customers to drive the Mercedes sub-brand’s models.

“Like the (GLK) compact SUV, AMG cars are high-performance cars,” a Mercedes executive says. “They actually plant more powerful engines in regular cars. They are not really sports cars but they perform like sports cars.”

The AMG ML63 SUV already is seen on Indian roads, and the 7-passenger GL63 AMG, which offers the performance of a sports car and the ground clearance of an SUV, launches next year.

Mercedes has 70 retail outlets in 36 cities and soon will reach 84, giving it the largest dealer network among luxury automakers in India. Apart from four major metropolitan areas, its retailers are spread across the country’s interior. Its new showroom in Kochi, for example, is as large as its Delhi flagship showroom and can display 19 cars.

The automaker’s rollout of new products, emphasis on service and enhancement of the customer experience all are means to a single end. As described by Kern: “People buy a super-luxury car not because they need a car. They buy because they wish to fulfill their dreams – exclusively.”