Warc Blog

Premium automakers target India

23 January 2013
NEW DELHI: Carmakers like Mercedes-Benz, BMW and Audi are targeting India's premium hatchback sector, even though these models previously failed to replicate their popularity across Europe in China.

Mercedes-Benz, a unit of Daimler, is set to launch the A-Class in India later this year, and will price it at less than Rs2.1m. Audi is also anticipated to roll out its A3 in the country next year.

On its part, BMW plans to introduce the 1-Series hatchback before the close of 2013, forming part of the organisation's efforts to drive growth when demand remains sluggish in developed nations.

"You will not get growth from the matured markets so emerging markets such as India, Korea, Brazil, Russia and China are very important," Philipp von Sahr, BMW's president for India, told Bloomberg.

According to IHS, the research firm, sales of luxury vehicles will quadruple in India by 2020, versus a 40% expansion globally. JDPower, the consultancy, also expects India to become the world's third biggest auto market by the same date.

(Warc subscribers can read more about the marketing of luxury cars in India.)

"India is a poor country but people still want a piece of luxury, and at the right price point, they will buy a BMW or a Mercedes," said Neelesh Hundekari, a partner at A.T. Kearney, the consultancy. “If you have scale aspirations, then it's important to succeed with the right models at the right price points."

Not all commentators share this optimism, however. Ashvin Chotai, managing director of Intelligence Automotive Asia, the insights group, thus warned that interest levels may prove muted.

"Hatchbacks are unproven in the premium segment," he said. "People would prefer to buy a larger and more luxurious model."

Indeed, high-end hatchbacks took just a 4.4% share of the 1.2m luxury cars purchased in China last year, compared with a share of almost 25% among the 1.9m luxury vehicles acquired in Europe.

"The Chinese are crazy about bigger cars," Abdul Majeed, head of the Indian automotive sector for at PricewaterhouseCoopers, the advisory group, said. "Manufacturers are trying to increase their customer base with such models and I don't see why these models won't succeed."

In seeming evidence of this, fully 1.6m hatchbacks were sold in India during 2012 across all pricepoints, the highest number of any market around the world.

"People today want a car that's easy to park and is efficient, as fuel prices are only going to rise," Nitin Dossa, chairman of the Western India Automobile Association, said. "It's a craze to have a hatchback."

Data sourced from Bloomberg; additional content by Warc staff

 
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