Daimler AG's Mercedes-Benz will launch smaller luxury cars in India in order to attract middle-class consumers. Daimler expects that with this move, it will be able to close the widening lead of BMW AG in the second fastest growing major economy in Asia.
Specifically, Mercedes intends to introduce cheaper vehicle models beginning 2013 to attract first-time buyers of luxury vehicles in the country, according to Debashis Mitra who is the division's India sales chief.
The move follows BMW's launch of the locally manufactured X1 compact SUV, which is now the vehicle manufacturer’s bestselling model in the country.
BMW and Mercedes, which together hold 70 percent of the country’s premium vehicle segment, are competing over a market estimate to almost triple to 47,000 vehicle units by 2015, according to IHS Automotive. Mercedes lost the top premium sales record in India to BMW in 2009.
According to Rakesh Batra, who heads Ernst & Young's auto unit in New Delhi, factors that fuel growth in luxury vehicle sales in India are the growing aspirations of the people, better highways and higher disposable incomes. He added that with the number of millionaires in India increasing, the demand for premium goods will also rise.
Mercedes delivered 6,753 units in India in the year ended March 31, compared with the 7,079 vehicles delivered by BMW, which aims to sell at least 10,000 units in the country this year. The lower sticker price is part of the success of the X1, which begins at 2.2 million rupees ($49,900) in New Delhi.
That is less than half the 4.9 million-rupee sticker price for the imported ML, which is the cheapest SUV of Mercedes. The C200 CGI Executive sedan, which is the lowest-priced Mercedes, costs 2.58 million rupees. Mitra said that Mercedes intends to manufacture the new compact models, including small SUVs and sedans, locally from kits to reduce the cost.