Mercedes Seeks to Upend Audi in India Luxury Market

MUMBAI – Mercedes-Benz India is trying to make up ground lost rapidly to rival luxury-car makers BMW and Audi.

Mercedes models have been sold in India since the 1950s, and the auto maker has built cars there for the past 20 years. But it took less than six years for its German rivals to catch up with, and in some years exceed, Mercedes sales.

Current strategies include introducing an A-Class compact hatchback and reaching out to younger, affluent buyers through fresh, award-winning designs and dynamic driving qualities. Social media is a key; the auto maker claims the A-Class has more than 1 million Facebook “friends.”

The A-Class offers fuel efficiency of 47 mpg (5.0 L/100 km) and is affordably priced at Rs2.2 million ($37,300) for the 1.6L gasoline-powered model and Rs2.3 million ($39,000) for the 2.2L diesel. These qualities helped Mercedes land 400 bookings over a 10-day period.

Mercedes India CEO and Managing Director Eberhard Kem calls 2013 “the year of the offensive,” declaring, “The overwhelming success of the A-Class inspires us to push ahead even more aggressively with our new-generation cars for India.”

The auto maker is investing Rs2.5 billion ($42.4 million) in its Indian plant to double production capacity of C-, E- and S-Class vehicles to 20,000 units. A-Class units come to India completely built up, but by next year the hatchback will be assembled locally, with its price coming down as a possible result.

Other newcomers to Mercedes’ Indian portfolio are the GL-Class large SUV, priced at Rs7.7 million ($131,000) and diesel B-Class multipurpose vehicle at Rs2.5 million ($42,400). The auto maker now markets 11 luxury models and two super-luxury models in the country.

Audi outsold Mercedes and BMW by nearly 1,000 and 2,000 units, respectively, in 2012, WardsAuto data shows. Audi deliveries through May jumped 38.5% year-on-year to 2,740, but A-Class sales helped Mercedes close the gap with a 105.1% spike to 2,580.

“We are ambitious, and the Mercedes brand has a lot of potential, but we are not in the numbers game,” Kem says. “Profitable sustainability is our aim.”

If Mercedes is not in the numbers game, Audi is, declares Michael Perschke, managing director-Audi India.

“The No.1 position is already taken,” he says. “It would take more than A-Class to dethrone the champion.”