Mercedez Benz Is Back To Regain Its Leadership Position

By reimagining the way it operates in India, through new launches, creative financial solutions and improved customer perception, Mercedes-Benz is back on top of the country’s luxury car market.

- N Madhavan

The year 2012 was a particularly bad one for Mercedes-Benz in India. Its performance hit its nadir as the company dropped to third spot, in terms of sales volume, in the luxury car market, behind compatriots BMW and Audi (see chart on page 63). The Stuttgart-based carmaker, which had entered India independently in 1994 and dominated the market for a decade-and-a-half, posted rare losses as well (Rs 11.6 crore in 201112 and Rs 12.8 crore in 2012-13).

Its problems began with the entry of BMW and Audi into the Indian market in 2007. The duo, being late entrants, unleashed a product offensive at attractive prices. Like Mercedes-Benz, their vehicles too had the famed ‘German engineering’ DNA. But what caught the fancy of customers was their modern design and styling. Mercedes-Benz, on the other hand, had a more dated design architecture. What made matters worse was that it lacked a strong SUV portfolio. Its traditional communication strategy and approach also did not suit the changing customer profile and soon the brand was perceived as one suited to people with an older age profile. BMW, Audi and other players like Jaguar Land Rover and Volvo gained in reputation and, consequently, customer attention. In 2009, BMW overtook Mercedes-Benz, and Audi followed suit in 2012. The fact that Mercedes-Benz had lost the crown globally to BMW in 2005 did not help either. With the parent itself facing strong headwinds, the ability of the Indian operations to react strongly to the altering market environment was impaired.