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German Cars and the India Car Industry
Doesn't the adrenaline shoot up at the thought of cars from the 'alma mater' of the automobile industry? Anyone with even a passing knowledge of automobiles is sure to associate German cars with features such as luxury, competence, sophistication, dependability, elegance, and great performance. The slogan: 'Vorsprung durch Technik', meaning progress through technology, originally coined by Audi, holds good for the German car industry as well.
Germany is home to some of the best-known premier luxury car brands in the world. If one were to make a list of all the luxury cars in the world, one is certain to find at least half of them of German origin. The Porsche, BMW, Audi, Benz, and Daimler are the major luxury car brands from this country.
So, what is the connection between such high-luxury car makes and the essentially agricultural, impoverished Indian economy? Is there a place for these vehicles in a country that is at best a puzzle to the West, and at worst, chaotic?
So, what is the connection between such high-luxury car makes and the essentially agricultural, impoverished Indian economy? Is there a place for these vehicles in a country that is at best a puzzle to the West, and at worst, chaotic?
Bundle of Contradictions
The Indian economy needs to be understood for what it is - a curious mix of the high and the low. In an economy that is still rooted in agriculture, the automobile industry presents a glaring dichotomy. This is symbolic of the paradox that India is: while farmers are committing suicide in most parts of India, the automobile industry, basically seen as a rich man's preserve, has been growing at a rate that few other industries can match!
Look at these amazing facts: India is the second fastest growing automobile market in the world, next only to China. India's Automotive Study estimated in 2007 that the size of our automotive industry is around €21 billion a year, which is roughly 5 per cent of the nation's gross domestic product (GDP).
With a total production figure of over 1.5 million vehicles and direct and indirect employment of over of 13 million people, this sector has been achieving a 16-17 per cent annual growth in the last five years.
Despite all the noise about the growth of the Indian economy, the market for luxury cars, which is Germany's major offering, is still very small. It is estimated that all the luxury German car manufacturers together sold no more than 5000 units in 2008. It is jocularly remarked that the production of Mercedes vehicles in India for the whole year equals that of a single day in its German Sindelfingen unit!
Apart from the high purchase and maintenance costs of these luxury vehicles, another factor that has impeded the growth of luxury cars is the bad condition of Indian roads.
Look at these amazing facts: India is the second fastest growing automobile market in the world, next only to China. India's Automotive Study estimated in 2007 that the size of our automotive industry is around €21 billion a year, which is roughly 5 per cent of the nation's gross domestic product (GDP).
With a total production figure of over 1.5 million vehicles and direct and indirect employment of over of 13 million people, this sector has been achieving a 16-17 per cent annual growth in the last five years.
Despite all the noise about the growth of the Indian economy, the market for luxury cars, which is Germany's major offering, is still very small. It is estimated that all the luxury German car manufacturers together sold no more than 5000 units in 2008. It is jocularly remarked that the production of Mercedes vehicles in India for the whole year equals that of a single day in its German Sindelfingen unit!
Apart from the high purchase and maintenance costs of these luxury vehicles, another factor that has impeded the growth of luxury cars is the bad condition of Indian roads.
Heartening Scenario
Despite such bleak numbers, German car manufacturers are lining up to take a slice of the Indian luxury car market for the simple reason that while the automobile industry growth rate was around 16 percent a year, the market for luxury cars expanded by 50 percent. BMW, for instance, sold around 1400 cars in 2007, but had estimated sales of only 1,000 cars during last year. It expects to sell 2,000 units in 2009.
Audi too has been taking giant strides in the Indian auto industry. Through its handful of dealerships across the country, Audi introduced the highly sophisticated A4 sedan in July 2008. The most awaited model from the house of Audi, the sizzling R8 sports car made its grand entry in November 2008. This car is one of the most powerful to ever reach Indian shores that forks out an amazing 420 horsepower on its advanced engine and can touch speeds of over 300 kph. Audi reckons that it can sell 20 units by the end of 2009. Audi plans to keep this model as its flagship brand for the Indian market till at least 2015. It also plans to introduce the new car, the Q5, into India later in 2009.
Audi too has been taking giant strides in the Indian auto industry. Through its handful of dealerships across the country, Audi introduced the highly sophisticated A4 sedan in July 2008. The most awaited model from the house of Audi, the sizzling R8 sports car made its grand entry in November 2008. This car is one of the most powerful to ever reach Indian shores that forks out an amazing 420 horsepower on its advanced engine and can touch speeds of over 300 kph. Audi reckons that it can sell 20 units by the end of 2009. Audi plans to keep this model as its flagship brand for the Indian market till at least 2015. It also plans to introduce the new car, the Q5, into India later in 2009.
Impressive Lineup
Of all manufacturers, Mercedes is the best placed, both in terms of units sold and infrastructure of dealership network. It has been around in some or another form in India for over fifty years, a position none of the other three majors enjoys. Three of its premier models, the Mercedes-Benz C, S, and E Class vehicles are built in India.
Continuing its aggressive push for introduction of more models into India, Mercedes released Indian versions of its sedans, the C-Class and CLK-Class in early 2008. It is the most preferred luxury car among Indian CEOs. The list of prominent owners of the BMW models in business looks like a who-is-who of the Indian industry. Kumaramangalam Birla; KP Singh of the DLF Group; V. C Burman, Chairman of Dabur Industries; the Singh brothers, erstwhile owners of Ranbaxy; Subhash Chandra of Zee; Shiv Nadar, Vijay Mallya...well, the list is endless. If the Ambani brothers see eye to eye on one issue, it is that in their lineup of luxury cars, the Merc is the most preferred one. The high degree of customisation it offers is cited as one of the reasons for this popularity among the elite.
BMW also has a decent presence in India. It has twelve dealership network in the country. It introduced its luxury M Series cars - the M6 and M3 coupe, and the M5 sedan along with the X5 4.8i at the Delhi Auto Expo in January 2008. In the month in which Audi launched the A4, BMW came out with its 5 Series variants. It is also seriously mulling to introduce small cars into India, whose conditions are better suited for this segment than for large cars.
Continuing its aggressive push for introduction of more models into India, Mercedes released Indian versions of its sedans, the C-Class and CLK-Class in early 2008. It is the most preferred luxury car among Indian CEOs. The list of prominent owners of the BMW models in business looks like a who-is-who of the Indian industry. Kumaramangalam Birla; KP Singh of the DLF Group; V. C Burman, Chairman of Dabur Industries; the Singh brothers, erstwhile owners of Ranbaxy; Subhash Chandra of Zee; Shiv Nadar, Vijay Mallya...well, the list is endless. If the Ambani brothers see eye to eye on one issue, it is that in their lineup of luxury cars, the Merc is the most preferred one. The high degree of customisation it offers is cited as one of the reasons for this popularity among the elite.
BMW also has a decent presence in India. It has twelve dealership network in the country. It introduced its luxury M Series cars - the M6 and M3 coupe, and the M5 sedan along with the X5 4.8i at the Delhi Auto Expo in January 2008. In the month in which Audi launched the A4, BMW came out with its 5 Series variants. It is also seriously mulling to introduce small cars into India, whose conditions are better suited for this segment than for large cars.
The Car for the People
By far, in terms of numbers, the German car at the top of the pack is undoubtedly the Volkswagen. It has chalked out major plans for this market. 2009 promises lots of fun for the upper middle class Indian consumer. Volkswagen plans to bring in the Volkswagen Beetle, the popular 'love bug', to augment its existing lineup that includes the Passat and Jetta and the Touareg. With the company making huge investments in India, we can get to see roads sprinkled with more new models. Its subsidiary, Skoda, is already doing very well here.
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