Mercedes Benz- A Quest for its Lost Position

When it comes to luxury cars, the first thing that comes to mind is Mercedes-Benz. Once the market leader but today it stands at number 3 with stiff competition from its rivals BMW ad Audi. So, what could be the possible reason for this downfall? Is it the absence of Mercedes cars in some popular segments or something else? Well, the reasons could be numerous. One thing that comes to mind is the launch of numerous variants by BMW and the Audi. Another reason could be the absence of the company in the smaller SUV segment which are currently very much in demand and popular.

As per Bernard Kern, the new boss of Mercedes India they are out with their new 4 pillar plan to increase the sales: new products, total cost of ownership, driving programmes and robust network. With these four pillar plan the Mercedes Benz India Limited seems to substantiate its connection between the increasing numbers of rich and young people who can easily afford 25-30 lakh cars.

Kern also said, “We are the only automotive company at present that offers leasing. So with all the benefits you have out of leasing, the tax benefits you have and no outflow, you can invest your assets somewhere else and you just pay for the usage and so on.” With several more advantages to count in leasing like there is no down-payment, the idea seems to be good.

Mercedes Benz

Currently Mercedes Benz has 56 sales and service outlets around the country and is further planning to add up 6-8 service outlets in the current year. It is also planning to bring in the next series of products by increasing its installed production capacity to 20,000 annually by the early next year.

In order to increase the appeal and popularity of the car among the youths, the company is designing a completely new range of cars. In terms of other strategy, the company has planned up several other initiatives as well; like the Performance Drive in which the Mercedes will motorsport talent, driving on the racing circuit and the 47 day long world tour that will start on September 16th. In the world tour the car will cover 7 countries and in the last will come to India. There is also an SUV test track drive and a paid guided tour of the Mercedes-Benz India plant in Pune, Maharashtra.

Overall, with these strategies the company will be able to gain its lost position or not will be the point to look out for. 

Right Product at a Right Price - A Formula of Success

When it comes to technology, especially in the auto sectors, Japanese and Korean manufacturers can never be defeated. In India as well as globally, they are one of the most sought after and dependable car manufacturers. The list of their popular cars includes Hyundai Santro, i20, Verna, Maruti Swift Dzire, Honda Civic saloon, Toyota Innova and many more to count.

With the consumer preferences changing rapidly, it becomes quite tough for the manufacturers to be in sync with the likes and dislikes of the consumers. Focus and the continuous efforts in R&D with matching financial resources has helped these car makers from Japan and Korea to establish themselves even in the competitive US car market. Hyundai in particular has been quite aggressive with its marketing spends in USA, they were also responsible to create a new paradigm in terms of cars sales when they offered 5-7 years of warranty on their product. Hyundai seems to have studied the Japanese approach to the US market in the eighties and have responded almost similarly.  While quality and safety are in no doubt important features but it now seems to be relegated to a lower order of benefit as compared to vehicle styling. Styling obviously has to become the key reason for brand purchase as it help individualize ones car thus helping them to stand out in a crowd.

The past year has not been good for the auto industry and the same seems to be continuing in the 2013 as well. In India, considering the recent excise hike on the SUV and the economic slowdown gives negative vibes about the future, but still it is a market full of potential and promises. It may be due to the increasing number of young people or the growing wealth or may be the urge to own a four wheeler for a comfortable life. 

Even though the industry is seeing a downfall, companies having great foothold and resources along with high capital base are likely to survive and benefit in the long run. The only thing that the industry needs to keep in mind is the right product, right price and the right offers.

The 3% increase in the SUVs excise duty has already started to shed its impact on the growth where as the economic slowdown has added to the woes negating the market sentiments and reducing the overall foothold at the dealerships. However, the market is still unstoppable. Moving forward to the installment plans, since 75% of purchases are financed, it will have low impact on purchases made on monthly installments. Besides the heavy discounts and offers to increase the sales can also be of some help to the sector.

Moving further, in bigger cities like Delhi, the expectations are for a better quality and value for money on the other hand in rural areas or first time buyers are more likely to go ahead and purchase cars with focus on price. So brands with focus on these product and price will not only survive but can also profit in the long run.