Revving up for the challenge

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: Visibility is turning zero on the Mumbai-Pune Express Highway as the monsoon shower does its number. The Mercedes-Benz new M-Class cruises against the low hanging clouds with unflappable ease. The SUV is true to the Mercedes DNA—sporty and luxurious.

While it still turns some heads when it zips across city roads, the journey is beginning to get a little difficult for the proud bearer of the dreifach stern.

Industry experts argue that the brand is infected by ‘legacy hang over’ and needs to overcome it fast, before its too late. The brand, that has enjoyed the first mover advantage in the Indian luxury car market, is faced with growing competition from brands making a beeline into India, including one from the stable of its old partner Tata Motors, which has launched the Jaguar and the Land Rover in the country.

The Mercedes brand has been in the country for over five decades and is largely seen as the brand that introduced Indian customers to luxury cars. Way back in 1954 it had entered into a technical collaboration with Tata Motors to produce trucks. Since then it has established its presence with a strong distribution and after-sales service network. While all this gives it an obvious edge over new entrants, the sales figures tell a different story.

Among its various competitors, BMW is giving Mercedes a serious run for its money. In the first six months of 2009, BMW sold 1,747 units while Mercedes clocked 1,280 units. According to figures released by the Society of Indian Automobile Manufacturers (Siam), BMW sold 755 units in April-June (2009-10), a growth of 7.70% year-on-year, while Mercedes sold 571 in the said period, a dip of 28.45% year-on-year. Last year, BMW sold 2,908 units compared to 3,511 units of Mercedes.

“The dominance of Mercedes-Benz in India’s luxury market has been seriously threatened by the improving performance of its competitors,” says, Ammar Master, senior market analyst, India, JD Power and Associates. “The entry of Audi and Volvo (to a lesser extent) has also impacted its traditional strong position,” he points out.

Till May 2009, Mercedes-Benz has lost up to 10 percentage points share compared to a year ago. In comparison, BMW’s segment share stands at 42% so far this year, up from 38% last year. Audi’s share grew to 16% (12% in 2008) and Volvo’s share rose to 3% (1% in 2008).