With changing tastes and preferences among the youth, women and middle-class people in India, today's luxury car makers have started manufacturing less expensive cars to target these groups. More and more luxury car companies have started designing affordable models, targeting the youth and women in the country.
As the luxury car making companies are trying to increase their sales in India, which are lagging much behind China, they are trying to attract the attention of the large middle-class population with local hatchbacks and other cost-effective small cars. Examples of these are the Mini Cooper and the Mercedes B-Class tourer vehicles. Commenting on the same, Eberhard Kern, Managing Director of Mercedes-Benz India, said, “This is a real year of offensive." For the recently concluded fiscal year, sales of the company dropped almost by one-third in comparison to the last year.
It is clear that the country's buyers are now clearly in love with small vehicles, as evident from the current sales figures. Compact vehicles account for more than 75 per cent of all passenger vehicle sales today. Luxury hatchbacks, such as those made by Mercedes-Benz India and BMW India, face a lot of competition from mid size sedans in the price-sensitive Indian car market. Automotive leader at Pricewaterhouse Coopers India, Abdul Majeed, said, “What the (manufacturers) are trying to do is lower the prices and create a much more marketable population. That trend is going to continue."
Annual sales of luxury cars in India currently are just a little more than 20,000 vehicles, which, in sum total, constitutes only 1 per cent of the total car market. In comparison, the corresponding share for luxury vehicles in China stands at 7 per cent. Car companies now want to attract Indians who are affluent, but do not have the same resources as the super-rich.
Kern said that local assembly of cars would not prevent buyers from purchasing these vehicles, since it is known all over the world that Mercedes-Benz quality all over the world is uniform. Completely knocked Down (CKD) production, which has cars built from imported kits, such as the Audi R8 Spyder avoid high import taxes. With these changes, Mercedes-Benz India will definitely be able to target a new and young audience.
At Shaman Wheels dealership in Mumbai, which sells Mercedes-Benz cars in India, Director Amar Sheth said, "The current segment of customers is a CEO or the owner of the business. With the new generation cars coming in, it will be totally different. It might be his son, or his wife... (or) people between 20 and 30 years old."