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The Indian luxury car market is bustling with top-notch auto brands, all attempting to make sufficient room for themselves... And while Mercedes-Benz takes the honours for starting the music, will its song last long enough? It’s a pandemonium out there... are we forgetting that?

John Thain, Chief Executive of New York Stock Exchange (NYSE), was in China a couple of months back for very obvious reasons – business. Most of the time, he kept himself busy by exchanging pleasantries with Chinese plutocrats; and suavely, he also never missed the opportunity to criticise the Chinese government’s rules & regulations, especially the pending legislation, which would allow Chinese companies to list overseas, in this case, on NYSE.

Well, a look at the figures shows that the combined resources mobilized by Shenzen and Shanghai in China stood at a mammoth $43.1 billion in the first 10 months of 2006, while the combined mobilisation of NASDAQ, NYSE and American Stock Exchange was at $38.3 billion; London Stock Exchange, including the AIM (Alternative Investment Markets), was at $40 billion (Dealogic data). The editor of China Economic Review reacting to John’s visit with a belligerent, “NYSE is no longer in a position to march into China and sell itself on the virtue of being the biggest and best; as listing and good corporate governance kudos (in American exchanges) come with a significant price tag in the form of Sarbanes-Oxley compliance expenses.” Back home in India, going through the news reports of NYSE and others picking a 20% stake in National Stock Exchange (NSE), it appeared as if a milestone had been achieved! Though it is sure that including the likes of NYSE and NASDAQ (with whom BSE is supposedly in talks) will lead to higher valuations, the question still remains – will this lead to greater financial integration, particularly within Asia?

Unfortunately, as reported by our Business & Economy bureau, financial integration within Asia has not kept pace with Asia’s integration with the rest of the world, whether it was cross border bank borrowing and lending, portfolio assets and liabilities exchanges. Asian countries depend more on inter-regional flows than intra regional flows. With the emergence of international banking centers – Hong Kong SAR, Singapore & Tokyo – co-operation should be encouraged between Asian exchanges. And why not out, when 6 out of 10 exchange transactions are from Asia. At times it’s really amusing how a change in latitude, changes a lot

Wilfried’s smugness is not unwarranted. Of the 3,000 luxury car units sold in upper echelons of Indian car market annually, DC India controls almost 50% of the market, with its high selling Mercedes Benz. But, the top dog position is under siege. For starters, BMW, growing at a whopping 323%, has already outsold Mercedes in the A4 segment. Mercedes’ bread and butter C class has been devastated by the charm of the BMW 3 Series. Between April to August 2007-08 (SIAM) BMW sold 272 units of the car as compared to Mercedes’ 258 units. Wilfried is quick to dismiss the anomaly as pure beginner’s luck. “When you enter a market, there’s always a novelty factor involved,” he asserts. But who knows, maybe it’s not just the newness of the brand, and the Indian consumers actually relate better with the latest 3 series (as the present Mercedes C-Class is a generation older)!

Take 2: December 3, 2006: It was an opulent occasion at Mathura Road, New Delhi, symbolising the launch of the first Porsche Centre in India! They were all there; sophisticated PR girls, Don Juan journalists, Gucci sporting company executives and a gourmet buffet. On our part, we were savouring the prospect of test-driving those flashy Porsche sports cars, lined up outside the state-of-the- art showroom. The ambience was spectacularly in line with what Porsche globally stands for – high end consumerism!

Today, a year since operations have been on in full swing, Porsche has already sold 200-250 units! Ashish Chorodia, CEO, Shreyans Motors, (Porsche Centre, New Delhi) told 4Ps B&M, “Geographically, North India accounts for 45%, West 35% while the rest of Porsche sales are distributed in other regions.” A positive beginning! Is Porsche ready to take on more identifiable competition in India? George Wills, Regional Operations Manager (Middle East, Africa & India), Porsche, is upbeat. “We have a bag full of ideas, but we will look at the market closely. After Delhi, we will have a centre in Mumbai, Bangalore & Hyderabad,” he reveals to 4Ps B&M. Upbeat and optimistic? Sure!

Porsche & Audi (both do not have an assembling plant in India as yet) are hell bent on winning this race. The Audi A4 series has been doing positive numbers in the Indian market. Although, not threatening to either Mercedes or BMW for now, the Bavarian major has a deep fan following in the country. Coupled with a shrewd business strategy, they can easily take on the best in the biz!

Take 3: “The Indian experience has so far been very positive, as everybody was helpful in establishment of the BMW brand here,” avers Peter Kronschnabl, President, BMW India, while gently gazing out of his cabin, at the Gurgaon skyline. The feel good factor propelling BMW India forward was evident throughout that the 4Ps B&M team was at the company’s upmarket office in the Delhi suburb. According to Kronschnabl, right from their Gurgaon facility’s layout to the massive dealer network, everything in India is at par with BMW’s global undertakings. BMW’s foray into India was marked by immense hoopla because of the company’s Bavarian roots and premium badge; after all it’s not every day that one of Germany’s elite four (Mercedes Benz, BMW, Porsche & Audi) enters a significant market. BMW has not only gained ground in second fastest growing economy, but has shown its wherewithal to fight the seeming invincibility of Mercedes Benz.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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