Mercedes Benz India Limited has sold more cars priced above Rs 1 crore in 2021 than entry-level models in the range of Rs 40 lakh to Rs 50 lakh.
In pre-pandemic 2018, cars in the Rs 40-50 lakh segment comprised 40 per cent of its sales, while the Rs 1 crore andabove group made up 12 per cent of the sales. The Rs 50 lakh to Rs 1 crore segment (medium range) comprised 48 per cent of its sales.
In post-pandemic 2021, the Rs 1 crore and above segment contributed 29 per cent to its sales. The share of the medium segment stayed the same , but the share of the entry-level is only 24 per cent .
“This shows that the luxury market is maturing,” Martin Schwenk, managing director and CEO of MBIL, said at the inauguration of the fifth generation C-Class.
The most telling example of this is perhaps the fact that the company sells what it calls its “bread and butter car” the E Class in Long Wheel Base version that retails starting from Rs 67 lakhs only, choosing not to bring the normal E-Class that sells in other countries including its mother country Germany, the UK, Dubai and worldwide.
“India is the only Right Hand Drive (RHD) country that sells the E-Class in LWB. We did not find a business case for the normal E-Class here. We took into account the customer needs here of bigger cars with bigger prices,” said Santosh Iyer, vice-president, sales and marketing, MBIL.
Higher corporate earnings, debt free balance sheets, improved road infrastructure, sharp growth of high networth individuals (HNI)s are driving luxury car sales in India.
Besides, the strategy to sell fully-loaded cars rather than stripped down versions has paid off for Mercedes.
The company will cross 1,5538 units sales, its highest so far, easily this year considering it has already sold 4,000 units in the first quarter with an order bank of 5,000 units.
“People are now travelling by road far more following Covid, avoiding air travel, and improved roads are only pushing this trend. Sectors like Delhi-Jaipur, Delhi-Chandigarh, Chennai-Hyderabad are a dream to drive on. Besides, socio-economic factors like the average age of buyers of Merc cars have come down from 42 years to 35 years. These customers are buying cars before they buy a house. Their priorities in consumption are different. They want to reward themselves. Besides, growth of start-ups, Unicorns are also success stories where the young want to show off their success,” analysed Iyer,
The growth of HNIs is also coupled with the growing propensity to show one's status. "With a digital economy that is transparent people are no longer afraid to show their wealth. While earlier people would be afraid to show off their wealth, now they no longer fear that and are open to conspicuous consumption,” said Iyer.
The company’s new retail format, too, contributes to this success story though the full impact of it will probably be felt down the years. Mercedes dealers no longer have to buy inventory at the company now keeps a central inventory and bills its customers directly.
“The pressure on dealers is now to perform on the customer satisfaction index. We now ask our customers to rate the dealers based on their experience,” said Iyer.
