 "Mercedes")
Over the course of 2017, Mercedes Benz, BMW and Audi have plans to launch over a dozen new brands and sub brands in the high-priced, low-volume category of performance cars, a segment that makes for a tiny sliver of the country’s auto market and has shown little sign of perking up in recent years. What then is the draw that the segment, more or less inert at around 35,000 units a month, holds out? The ability to become flag bearers of the badge, draw in customers who aspire to own the label, besides of course, tapping into the desire among young and wealthy Indians to own flashy wheels, say the companies.
Roland Folger, MD & CEO, Mercedes Benz India said that in recent years they have seen immense potential in India for AMG models (the performance category) and not just in the metros. “About 15 per cent of our total annual sales for AMG models is attributed to non-metro markets,” Folger said. Mercedes Benz leads the German luxury brands brigade with close to 50 per cent share of the performance market. It has 11 products under the AMG brand, the latest launch being the AMG GT Roadster and the AMG GT-R which the company calls ‘Beast of the Green Hell’ after it recorded fastest lap time at Nurburgring, a motorsports complex in Germany, also known as ‘green hell’.
Performance cars are more than double the price of regular models and are retailed at high margins, companies could earn as much as 40 per cent margins in this segment, say dealers. High margins however are yet to compensate for the low volumes in the segment. Still Mercedes Benz has kept its faith in the category with 11 models, Audi with five and BMW with six under the M label. “BMW M has played an important role in shaping the BMW brand. We launched the first member of the M family in India in 2012. Since then we have continued to grow the range,” says Vikram Pawah, president, BMW Group India.
Globally, performance cars are a booming segment. Among sports car enthusiasts and passionate motoring fans, these cars inspire a fanatical loyalty. Many believe that as the wealthy Indian customer gets closer to his Western counterpart in terms of aspirations and purchase behaviour, the Indian market could grow too. Folger says, “We keep a close eye on the Indian market and launch our global products here accordingly.”
The interest in India shown by the luxury brands is also a sign of the growing power of the country’s growing set of billionaire businessmen who, according to the recently released Forbes list, are getting younger. Mercedes Benz says that its customer profile for the AMG vehicles is distinct from that of the rest of its product portfolio. They are much younger, for one.
The average age of an AMG customer is 30 years, seven years less than that of an average Mercedes-Benz buyer. “Our target customers for AMG cars are completely different from our existing sedan and SUV owners. They comprise a mix of luxury dwellers who seek performance motoring in particular as well as those looking for upgrades to the brand,” says Folger.
BMW has the second largest share in this market with its M range, followed by Audi whose R8 series is particularly popular among cricketers. The model is owned by captain of the Indian cricket team, Virat Kohli and actor, Ranbir Kapoor. According to Pawah, the M brand has passionate fans across the globe who follow every motor sports event and diligently track the brand’s performance. The company is focusing on a similar category of buyers in India. It has recently opened its store called ‘M Studio’ in Mumbai where customers can get a first-hand feel of the car and test drive a model of their choice.
Performance cars aim for being distinctive, say experts; they are not necessarily aiming to be central to the category. According to all the three German auto majors, performance brands’ customers want preferential treatment. They look for relationships with the brand that transcend the transactional nature of other automobile purchases. And the companies are all eager to comply.
Mercedes AMG customers, the company’s research shows, are well traveled auto enthusiasts. And the company spares no effort to lay out the red carpet for them once they come into the fold. Campaigns and events are tailored to the special needs of these customers and the marketing initiatives are tuned in to their evolving needs.
Companies also organise special tours and driving lessons to familiarise them with the features of the new models. Mercedes conducts AMG performance tours where customers are allowed a spin around the Buddh International Circuit (BIC), for instance. Both Audi and BMW provide customers with a similar set of experiences too.
While wooing the customer with such ardour helps build loyalty among the wealthy customer base, it also generates word-of-mouth publicity for the brand among non-users. It takes the luxury badge into households that cannot otherwise afford the luxury brand. And the companies believe that this may tempt some buyers to enter their fold with an entry-level version of the label.
The final goal, for the auto majors, is to ensure that their presence in the narrow band of performance cars is leveraged to the hilt. And the low volume performance car category helps companies increase their influence and sales in the rest of the market.
