market study-luxury car market in india
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4ps analysis of luxury car makers in IndiaTRANSCRIPT
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Market Study of Luxury Cars in India
Index
1. Introduction 1
2. History
Luxury car segment in India
Introduction:
India has always been a small car market. But in past few years Indian Auto Industry is
growing at an alarming pace. The demand for luxury cars has risen. Now every major luxury
car maker is trying to make its base in India. Few of them like BMW, Audi, Mercedes Benz,
Jaguar, and Rolls Royce have already set up their base in India. For the past few years BMW
has been the leader in sales among these car makers.
Mercedes Benz was the first company in luxury car segment to target India. But slowly other
major car makers started functioning in India. Now BMW has become the number one in
luxury car segment, in terms of sales. Rise of BMW is attributed to its India specific
strategies, like having price range starting from 23 lakhs, youthful design. The customer
profile has changed in this segment. Be it real-estate boom or increase number of high profile
executives or increase in number of entrepreneurs, purchase of luxury cars has always been
treated as symbols of status, independence, power, and recognition.
The recent growth in this segment is a reflection of changing lifestyle of affluent class in
India. Luxury car market accounts for only 3-4% in India, but the segment has been growing
at compounded annual growth rate (CAGR) of around 30% for last 3-4 years. Due to high
CAGR companies are getting attracted towards India. F1 racing coming to India also
symbolizes the increase in attraction towards luxury/premium cars. Companies are gearing up
to flaunt the ever increasing Indian Market where the demand for luxury and premium cars
has increased over the years. The fact is highlighted by the introduction of ultra-luxury
brands like Audi A8, Mercedes Benz SL-class, BMW 7 series, Jaguar XJ, Aston Martin DB9,
and many more.
Audi
Audi is a German car manufacturer company. Audi is known worldwide for high-quality and
innovative luxury cars. It is amongst the most admired premium automobile brands. The
success of Audi is attributed to its pioneering concepts in domain of advanced technology and
design.
History:-
The Birth of Audi:
The credit of Audi AG goes to August Horch- a pioneering figure in automobile engineering.
In 1899 he started a company in Cologne, with name Horch & Cie Motorwagen Werke. In
1909, due to indifference with Board of Management and Supervisory Board he left the
company and started a second company in Zwickau named- Audi Automobilwerke. The Audi
brand made its name due to its victorious involvement in sporting events worldwide.
In 1932, Audi merged with Horchwerke, Wanderer and Dampf-Kraft-Wagen (DKW) to form
Auto Union AG. It was headquartered in Chemnitz. The emblem consisted of four
interlocking rings symbolizing the inseparable unity of the four companies. All the
companies retained their brand names. Each company was assigned a specific market
segment: DKW- motorcycles and small cars; Wanderer- midsize cars; Audi- deluxe midsize
segment cars; and Horch- luxury car segment.
After the end of World War II, Auto Union AG was encroached by Soviet forces. Many
senior executives departed to Bavaria, where a new company-Auto Union GmbH- was
founded in 1949. The emblem of four rings was retained. In 1965, a new era began with
production of four-stroke engine vehicles under brand name “Audi”. The same year Auto
Union was acquired by Volkswagen Group. “Audi 100” was the first car launched under the
Audi brand name.
Audi India:
Audi entered Indian market in 2004. In March’07, Audi established its own sales company in
India. Audi has established a production unit in Aurangabad, Maharashtra. Audi is
assembling Audi A4, Audi A6 and Audi Q5 in Aurangabad. Apart from these cars, Audi is
importing Audi A8, Audi A8L, Audi Q7 and Audi R8 to Indian market.
Identity of Audi- Slogan and Logo
Audi’s logo consists of four interlocking rings. Each ring
represents one of the founder companies- Horch, Audi, DKW
and Wanderer. Audi’s Ad slogan- “Vorsprung durch Technik”
was given by Sir John Hegarty. The slogan means “advancement through technology”. Audi
had to fight a legal battle to extend slogan’s trademark protection.
USP:
Luxury and style: Sporty design, durability of car body.
Technology: Quattro four-wheel drive system, e-tron concept.
Mercedes Benz
History:
The history of Mercedes Benz is linked to two people- Gottlieb Daimler and Carl Benz. The
inventions of high-speed engines and automobiles enabled them to lay down foundations of
two enterprises. In October 1883 Carl Benz founded Benz & Cie in Mannheim and in
November 1890 Gottlieb Daimler founded Daimler-Motoren-Gesellschaft (DMG) in
Cannstatt.
Soon the names “Benz” and “Daimler” became trademark for origin and quality of engines
and vehicles. The trademarks of Benz remain unchanged; except in 1909, the logo of
Mercedes changed from cog wheel to a laurel wreath surrounding the name Benz. The brand
name of Daimler-Motoren-Gesellschaft was changed to “Mercedes” and the trade name got
registered on 26th September’1902. Mercedes was the name of Emil Jellineck’s 10 year
daughter. DMG opted to use the Mercedes to honour the contribution of Emil in sales of cars
and engines.
During the inflation period after World War I, merger of DMG and Benz & Cie took place in
1924. The purpose of the merger was to standardize design, production, sales, and
advertising. During this period both the companies worked as individual entities but marketed
jointly. In June 1926, the two companies merged to form Daimler-Benz AG. The products
were trademarked as Mercedes-Benz.
Mercedes Benz India: Mercedes Benz’s association with India is more than 50 years old.
Various engagements involve local production of cars, making available imported Mercedes-
Benz cars, research and development centre, and global sourcing of auto-components.
Identity of Mercedes-Benz: Slogan and Logo
Mercedes Benz logo is a three pointed star surrounded by a circle. The
concept of star came from a symbol Gottlieb Daimler used above his
own house. The three-pointed star symbolizes universal motorization-
the ambition of Daimler. “Driven by Innovation. Designed for life” is
the slogan of Mercedes-Benz.
BMW
History:
The origin of BMW is attributed to Gustav Flugmaschinefabrik and Karl Friedrich Rapp.
Gustav owned a company to build small aircrafts. In 1913 Karl founded Rapp Motoren
Werke in the suburbans of Munich. The company used to produce airplane engines. But these
engines suffered from excessive vibrations. Later they secured a contract with Austro-
Daimler and produced engines under license. In 1916, Rapp left the company due to financial
troubles. Two Scotsman- Franz Josef Popp and Max Friz- took over the company. Later they
merged Rapp Motoren Werke with Gustav’s company to form Bayersiche Flugzeunwerke. It
was later renamed as Bayersiche Motoren Werke (Bavarian Motor Works).
The company manufactured aircraft engines during the period 1917-19. After the Treaty of
Versailles, the company started producing airbrakes for railway cars. In 1923, the company
started the production of motorcycles. It was branded as R32. In 1928, they started the
production of cars at Eisenbach factory under license. From 1932 onwards they started
producing “real cars”- cars designed by their engineers and not based on some other car.
BMW India:
It is a subsidiary of BMW group. It is headquartered in Gurgaon. In Chennai, BMW has
established a manufacturing facility. Models of BMW 3 series, 5 series and 7 series along
with BMW X1 are assembled in Chennai facility.
Identity of BMW: Slogan and Logo
The logo of BMW was trademarked in the year 1920. The logo is based
on the circular design of aircraft propeller. BMW chose Bavarian
national colours as the logo which resembles rotating aircraft propeller.
Slogan- “The ultimate driving machine”.
Products:
Audi:-
Audi is one of the leading manufacturers of cars in the premium and supercar segments. The
company operates through nine production plants located in eight countries, those being
Germany, Belgium, Slovakia, China, Spain, Italy, Hungary, and India. The company
manufactures cars under six brands: Audi, Skoda, Lamborghini, Seat, Bentley, and
Volkswagen. The company is also engaged in manufacturing of engines for Audi brand, for
other Volkswagen companies, and for third-party customers.
Different models available in India: A4, A6, A7, A8, R8, RS 5, Q3, Q5, Q7, and TT.
BMW:BMW has production plants in 25 sites in 14 countries. BMW manufactures cars and bikes.
Cars are manufactured under three different brand names- BMW, MINI and Rolls-Royce.
Rolls-Royce, and BMW 7 series and Z4 series are considered as super-luxury cars. Various
Models available in India: 3 series, 5 series, 7 series, X1, X3, X5, Z4.
Audi
Car
s
Sedans
Coupes
Compacts
Sports Cars
Convertibles
Station Wagons
Brands under BMW
Group
BMW
MINI Rolls-Royce
Husquvarna
Mercedes-Benz:
Daimler AG produces cars, trucks, buses, and coaches under the brand name Mercedes-Benz.
It has manufacturing/assembling sites in 22 countries. Cars are divided in different
categories:
Roadster: SL class, SLK class.
SUV: G class, GL class, GLK class, AND M class.
Coupe: C class, CLS class, E class, S class.
Various models available in India: B class, C class, CLS class, E class, GL class, S class, and
SLK class.
Price:
Audi: The prices of various Audi models are as following:
Model PriceAudi Q3 2621000Audi Q7 5679060Audi RS5 7459000Audi A8 7653000Audi A4 2733000Audi A7 8853000Audi A6 4117221Audi Q5 4507000Audi R8 13249000
Mercedes-Benz: The prices of various Mercedes-Benz models are as following:
Model Price
C Class289800
0SLK 652600
Auto
mob
iles Roadster
SUVs
Coupe
Hatch-back
Sedan
Class 0
E Class530000
0
S Class916200
0GL Class
7634000
CLS Class
12400000
BMW: The prices of various BMW models are as following:
Model Price3 Series 28900005 Series 47170006 Series 99800007 Series 14650000X1 Series 2574000X3 Series 4507000X5 Series 9000000M3 Coupe 8300000
(Prices mentioned above are Ex-showroom prices in Mumbai in Rs.)
Comparison of highest and lowest price of cars (in India)
Audi Mercedes-Benz BMW0
2
4
6
8
10
12
14
1613.5
12.4
14.6
2.62 2.89 2.54
Higest PriceLowest Price
Brands
Pri
ce (
in m
illio
n r
up
pee
s)
Promotion: - India Strategy
BMW:
BMW is aggressive and fast, and its Indian journey proves that. The company replaced
Mercedes as the top-selling luxury car brand in India. Within four years of its launch in India
its market share has moved up from 9% in 2006 to 42% in 2011.
BMW is targeting young customers in India. It has introduced a varying product range at
different price levels. It is planning to strengthen its portfolio by bringing in a new 3 series,
MINI range, and the M5 soon. In Chennai, BMW has established a manufacturing facility.
Models of BMW 3 series, 5 series and 7 series along with BMW X1 are assembled in
Chennai facility. But due to high sales, it is planning to set up its second plant by 2015. The
local component sourcing is expected to rise. A global sourcing team is catering to their
global needs. Apart from this, they have identified 20 vendors so far. This number is expected
to rise in future.
Their marketing strategy is to create touch points like events with fashion designers, wine
tasting sessions and professional golf tournaments. In 2010, they organised an “Xperience
Drive” in Gurgaon to promote X series cars. They brought in international trainers and
organised a live performance of Raw BANG. A special test course was designed to highlight
X range's special features.
The dealership network of BMW in India is growing and they are planning to touch the 60
mark by 2015. BMW’s own financial firm is handling the finances of its cars, around 80%,
thus giving BMW financing a brisk business. They recently launched “BMW Premium
Selection”- a used-car business- in some of the dealership showrooms. Recently BMW has
started promoting its luxury small car- MINI in India. To promote MINI BMW is opting for
Guerrilla and experimental marketing strategy. Under this new strategy, they have floated
dummy models of MINI on a lake near Delhi and placed the dummies on the roofs of
skyscrapers. BMW has increased its spending on marketing by 40% in the 1st quarter of 2012.
Audi:
Audi is the third largest car seller in luxury car segment in India. They have targeted to
become largest car seller in India as well as in World. Currently they have a market share of
20% in luxury car segment. They are fastest growing luxury car company among other
competitors. They are trying to push down the price of A3 to match Mercedes-Benz B class.
Being part of Volkswagen is very advantageous for Audi to position itself very strongly in
India, as Volkswagen Group is investing huge sums on plants, marketing, and infrastructure.
They have targeted to launch at least one heavy-hitting car every year.
Audi is branding its products through advertisements. The ads are making a lasting
impression on the customers. These ads target the Audi Experience in a lucid fashion. Audi is
using Viral marketing campaigns worldwide. These include “Stolen Audi” miniseries on
YouTube and “Meet the Beckers” campaign. “Meet the Beckers” showcased experiences of
Audi owners through web series. Apart from these Audi has started a 24 hour TV channel-
Audi TV to showcase recent developments of Audi. Audi has established a production unit in
Aurangabad, Maharashtra. Audi is assembling Audi A4, Audi A6 and Audi Q5 in
Aurangabad. Apart from these cars, Audi is importing Audi A8, Audi A8L, Audi Q7 and
Audi R8 to Indian market. Audi has established a wide distribution channel in India through
its dealership showrooms across major cities. It has dealerships in 19 cities, thus reaching to a
large market segment.
Mercedes-Benz:
Mercedes-Benz is considered as symbol of power and status. These cars are generally used
by senior executives of companies, hence are generally chauffer driven. It is the first luxury
car maker to enter Indian Market, and it is considered the best luxury car India has known. It
started its India operations in the year 1994 and has the best infrastructure among the three in
terms of dealer reach and domestic component sourcing. Their dealers reach stands at around
34%. But now they are on back foot due to the sales of BMW and Audi.
Mercedes is now restructuring its India strategy. It has planned to target the youth segment,
due to increase in young entrepreneurs and company executives. The company is reorienting
its marketing strategy, brand positioning, and model line-ups to keep them aligned. For
example, they have increased emphasis on performance and sportiness of its cars in India. It
has associated itself with the promotion of F1 in India. They have planned to launch new
small and compact cars in India by 2015. To implement this strategy, they are planning to
invest Rs 135 crores in Indian market.
Recently Mercedes-Benz launched a new B-class car, a front-wheel-drive for small family.
Currently C- Class is the cheapest car of Mercedes. With the introduction of B-Class
hatchbacks, it is lowering the entry threshold. This car is in straight competition with Audi
A3. Due to its styling and agile contours, the new B-Class model is positioned as sports
tourer. To enhance its portfolio Mercedes-Benz has planned to introduce most of its 10 new
global cars in India. To achieve their goal, it is considering assembling its SUVs ML, GL and
GLC-Class in Chennai and Pune. Mercedes has established a wide network for customer
reach. It has 22 dealerships in 19 cities as well as 32 service stations in different states and
Union territories.
Conclusion:
The luxury car market in India is very small compared to other countries like China, USA,
UK, France, and many others. But this segment is growing at a fast pace. The luxury car
market is growing at an average yearly rate of 30%. This change is reflection of change in
lifestyle of affluent people in India. Since there is a large untapped portion of market
available to be leveraged, luxury car companies are targeting India as main hub for sales.
BMW, Audi and Mercedes-Benz are the three major players in luxury car segment. But the
other players like Ferrari, Jaguar, Volvo, Porsche, and Bentley are coming to India to increase
their sales.
The increase in demand for luxury cars is due to increase in number of young entrepreneurs
and senior executives from various fields. The average age of Indian Millionaire has come
down to 30-35 years. Since luxury cars are treated as symbol of power, status and
recognition, their demand among youth has increased many folds. To lure the young buyers
companies are reorienting themselves to the new market segment. As a result a lot of priority
is given to Research & Development, and Marketing. The designs are becoming more sleek,
sporty, and youthful. Newer technologies are coming up to improve the car experience of
buyers. A lot of efforts are put in to enhance security, durability and comfort ability of the
products. Pricing of products has also played an important role in the rise of this segment.
Companies like BMW, Audi and Mercedes has brought down the entry threshold by
manufacturing and assembling the cars locally.
To maximize the reach to target market, companies are establishing dealership networks
across the country. Every major city has an exclusive showroom and/or a service centre for
their products. A huge amount is spent on advertising as well. There is a significant rise in the
amount spent on ads, approx. 40%. The car companies are putting a lot of efforts in
strategizing their products in India because Indian auto rode on inflation while sales of cars
were affected in other countries. But recent statistics show a slight slump in the sales of
luxury cars. The reasons for this slump are increase in fuel prices, followed by increase in
import duty, and due to fall in rupee. The slump has made companies to revise their sales
target. Audi is the only company to defy the slump. It has recorded 35% growth in the first
quarter.
With the introduction of F1 in India, more luxury car makers will come to India to get some
share of fast growing untapped market for luxury cars.
References:
1) www.datamonitor.com
2) http://articles.economictimes.indiatimes.com/
3) www.audi.com
4) www.audi.in
5) http://www.mercedes-benz.co.in/
6) http://www.mercedes-benz.com
7) www.bmw.in
8) www.bmw.com