India: Audi takes lead on BMW in luxury car market

The Economic Times - In the pulsating race for leadership in India's luxury car market, Audi has opened up a slender lead on BMW, its German peer that has ruled the Indian luxury car space for the past three years.

Audi sold 759 cars in June, compared with BMW's 750, in a market that is clearly showing signs of a slowdown. Sales have hit a bump even at the top end of the car market, generally considered insulated from sluggish market conditions caused by high fuel prices and interest rates.

"It's the Audi effect, where customers are pulled by the strong brand that is reinforced by the largest line-up of luxury products offered in India. We did not target to be market leaders in 2012, but would like to build the momentum with new product offerings and stronger dealership network to sustain this newly-acclaimed feat in the long term," Audi India head Michael Perschke said. "It's a pleasant surprise. We were targetting leadership only next year," he added.

Audi's brave plans are in contrast with the dismal growth scenario in the Indian car market.

The mass-segment cars have already hit a tailspin with sales dwindling for most models. Luxury car sales also declined for most players in the first quarter.

Sales at BMW India, the wholly-owned subsidiary of German carmaker BMW AG, declined 12 per cent to 2,088 cars in Q1 against 2,377 cars in the same period last year.

Gap narrows

Audi fared better as sales in the first three months jumped 52 per cent to 1,908 units from 1,254 units in the year-ago period. The gap has narrowed considerably to a mere 180 cars that separate the two companies in the first three months of this financial year. Even Daimler AG's Mercedes-Benz, among the earliest luxury carmakers to enter India, is finding conditions tough. Daimler, which set up operations in India in 1996, saw sales down by a quarter to a mere 1,257 cars in Q1.

Audi, which toppled Mercedes-Benz globally in October last year, secured the second position in the Indian market in March this year. It had targetted leadership in the Indian luxury car market by 2015, but given the tremendous response to its aggressively positioned products such as the compact SUV Q3 and new A6 & A7 Sportback sedans, it notched up enough numbers to bypass BMW in June.

The Ingolstadt, Germanybased Audi's much-delayed India entry in 2007 has been marked by continued success with the launch of SUVs like Q7 & Q5 that helped it command segment leadership as well as renewed focus on newer car models A4 & top-end A8. Audi India has being using social media to tap the Internet-savvy younger generation and claims to have 804,000 fans on Facebook, the second-biggest online community after Audi USA in its entire global operations.

BMW, which started India operations in 2006, has been a pioneer in introducing luxury cars and SUVs, with contemporary models such as the 5Series and X1 that still command the largest chunk of its sales. The carmaker lost its monthly leadership as its second largest-selling 3Series sedan is at the fag end of its lifecycle and a replacement is coming in the next few days.

To be sure, the longdrawn-out race for leadership may have its ups and downs as BMW is slated to launch new models soon, which may help it clamber back to pole position again. The Bavarian firm is also planning to launch four to six new sedans and SUVs over the next four months to retain its edge in the Indian top-end market.

"We are still the market leader in terms of overall sales. What we share in terms of our domestic sales is our retail numbers while the competition could be out with their wholesale numbers that are actually delivered to the dealerships and could be higher than actual retail," the BMW India spokesperson clarified when asked on the changing numbers game. Market analysts said contemporary styling as well as a younger buyer profile seems to be the right strategy for the rise of Audi, which has positioned many of its cars and SUVs keeping in mind the changing demography of the Indian market.

"It's a fierce market as all brands are extremely competitive. But the new entrants have the advantage of novelty brand value that is advantageous to Audi, which is also aggressive in tapping the younger lot of customers to its advantage. The market is changing very fast; all the players in the luxury market will have to be sustainable to maintain their unique preposition in the long term," said Abdul Majeed, who tracks the auto segment at PwC India.

Even as the Indian luxury market is becoming morecrowded with an increasing number of global brands like Aston Martin, Koenigsegg, Ferrari, Porsche, JLR hitting the market in recent years, three German brands BMW, Mercedes-Benz and Audi continue to sweep the market, cornering over 75 per cent of the top-end market starting from the price band of Rs 25 lakh onwards.