The fastest rat in town…all the way from Germany
For now, BMW is ahead of Audi by 457 cars in the first half of this year. And Audi that recently dislodged Mercedes to become the prime suspect for BMW for the number 1 slot is ahead of the Stuttgart based firm by another 673 cars. In a luxury car industry that is worth around 30,000 cars a year, that means one good quarter and any of the three can come out on top by the end of this year.
These are the bare facts of the market as it stands today. But what is more intriguing is how the number one position affects these companies. Traditionally one would assume that unlike in mass market cars, the number game should not affect premium carmakers that much. And there is good reason for it.
While a Maruti Alto or Swift sells and sells more because of their visibility on the roads, it does not quite work the same way in the luxury car business. A Merc, Beemer or Audi are aspirational cars that thrive on exclusivity. Or rather they should. A Rolls Royce or a Ferrari or a Bentley often limits the number of cars that they are going to produce not because they are incapable of making more but because they wish to retain the exclusivity of these brands.
All three German car makers however are currently involved in a dog eats dog fight that ideally befits a mass market industry. Take for example the level of discounts that are on offer on these cars or the de-contented corporate editions that are being launched. A BMW 3 series today can be had for Rs. 21 lakh, a cool Rs. 2 lakh less than the sticker price. An Audi A4 is on offer for Rs. 1.8 lakh less while a C Class is also on offer on a bargain.
And if that was not all, this kind of a fight is on in other markets as well. Globally, the gap between BMW and Audi for the largest premium car maker tag is a mere 14,000 cars. Mercedes is some distance behind with 1 lakh units separating it from BMW but take the X1, X3, Q3 and Q5 out of the equation– segments where Mercedes is not present, and the story is a lot more intense.
It does not help either that all three of them often resort to whisper campaigns against each other that tears apart their otherwise nonchalant demeanour about the number game. Mercedes furiously attacked BMW for discounting and decontenting its cars when the latter overtook it in India in 2010. And its a similar story now with BMW accusing Audi of doing the same.
Tragically, some of these allegations are also at times true. For example, one of the three hides the exact price of its cars on its websites and to the media lest it is seen as too desperate and mischevious. If a entry level sedan is on offer for Rs. 21 lakh when the others are pricing their own cars at Rs. 25 lakh, surely something is gonna give. Similarly another of one them steadfastly remains defiant of increasing problems on its tyres even though a backlash is fast gaining momentum.
To be fair, there is nothing wrong in all this in a fiercely competitive environment. It happens in every industry and every sector. Perhaps though, a rat race of this intensity is unexpected and undesirable in a segment where the heart should rule over the head. I dont think you would be happy after buying a luxury car, if you come to know that your neighbour got it for Rs. 1 lakh less just because he bargained hard and you did not. Nor would you be happy if he gets the same car for an even better price because he buys it during the stock clearance of the car at end of the particular model’s lifecycle.
As it is, at the end of the rat race, the winner would remain a rat. A Maruti, Hyundai, Toyota or Honda may not be bothered with it, but surely the Mercs, Beemers and Audis of the world respect themselves a little bit more.