Mercedes eyes No. 1 spot in luxury car market this year

Written by Roudra Bhattacharya | New Delhi | Updated: Jun 30 2013, 09:04am hrs
Mercedes-Benz, the first luxury car maker to enter India, in 1994, is expected to emerge as the black horse in the luxury car market this year. Backed by strong volumes from a slew of new launches, the German car maker is likely to reclaim the pole position four years after losing the lead to rivals BMW and Audi.

Taking into account total sales of the three luxury car makers, Mercedes was number three at the end of 2012, but it has inched to number two in the first quarter of this year. Its launched this year include the A-Class and B-class diesel hatchbacks in the entry luxury segment, apart from the new E-Class executive sedan and GL-Class large SUV.

For us, the first quarter (January-March 2013) was successful with a 5.3% growth in a sluggish market. But with the new launches starting from May with the A-Class, we expect a double-digit growth in the second quarter. More launches are to follow and the volumes have started speaking for themselves, said Eberhard Kern, MD & CEO, Mercedes-Benz India, at the launch of the new E-Class.

Launched at a starting price of R41.50 lakh, the locally-assembled new E-Class is a key model for Mercedes, as it accounts for over 40% of its domestic volumes and has sold over 23,000 units till date. The E-Class follows the launch of the A-Class and new GL-Class earlier this year, with a B-Class diesel expected to follow soon.

Mercedes E-Class and S-Class sedans, and ML-Class and GL-Class are already leading in their respective segments. The new A-class, which has created a new segment of luxury hatchbacks, has already sold over 400 units. BMW is expected to bring its own A-Class rival later this year with the new 1-Series. As for other Mercedes models, the M-Class commands a four-month waiting period.

This is the year of the offensive for us, but we are not in the numbers game like our rivals. We want to focus on our own business and expect India to be in our top 10 markets by 2020, for which we will have most of our portfolio available over the next two years, added Kern. New models to be added in coming years include new entry sedan CLA and a compact SUV GLA.

Mercedes expects the Indian car market to touch seven million units by 2020 (4% of which will be luxury cars), from 2.4 million in 2012 (1.2% luxury cars). It is also doubling capacity to 20,000 units by next year on a R850-crore investment.

Mercedes advantage is that rivals do not have major new launches this year to give them a significant volume jump, but industry executives warned that an aggressive market and price discounting may play spoiler for Mercedes ambitions.

Mercedes lost its leadership in 2009 to BMW, which has since kept the lead for four years on the back of aggressive marketing and new launches in entry luxury segments with the X1 compact SUV. Last year, Audi also stepped up its game, pushing Mercedes to third spot with the launch of its Q3 compact SUV. In January-March 2013, Audi emerged as market leader, selling 2,616 units, but Mercedes has seen a significant jump since May with its new model onslaught. Audi sold 2,616 units in Q1

of 2013, Mercedes 2,009 units and BMW (including Mini), 1,465 units.

In 2012, Mercedes-Benz had sold 7,138 units, compared to BMWs 9,375 units and Audis 9,003 units. The domestic luxury car market size is about 25,000 units a year and includes other players like Jaguar Land Rover and Porsche.