BMW, Audi, Mercedes-Benz offer discounts of Rs 10 lakh on some models

Automobiles - Monday, December 24, 2012 9:47:31 AM

BMW, Audi and Mercedes-Benz have driven in the steepest discounts yet in the Indian luxury car market, a shift of gears forced by the sluggish sales that have reduced the race to the annual targets of these companies to a crawl.The three carmakers and their dealers are together offering discounts of up to 15 per cent, or a whopping Rs 10 lakh, on some models, ET has learnt after checking out the market, as these companies are staring at a low single-digit growth after clocking 30 per cent annual growth over the past five years. Experts say with dealers looking to dispose of the 2012 models by the end of the year, the discounts may rise further.The unprecedented discounts have come at a time the steep depreciation of the rupee would have prompted the carmakers to hike prices in regular market conditions.Luxury car dealers are able to contribute handsomely to the discounts because they enjoy a healthier margin of 8-9 per cent than their counterparts who deal in small cars and make do with just 2-3 per cent margins. This has enabled them to offer more than 10 per cent discounts on outgoing models such as the BMW X1 and Mercedes-Benz's petrol cars."We are offering discounts of 3-5 per cent, or Rs 1-2.5 lakh, plus benefits of extended warranty, free insurance, etc, for our brand, but it is much higher for the other two brands, which are under tremendous volume pressure to attain targets," said Audi India head Michael Perschke.While admitting that a few Audi dealers might be offering higher discounts on some models in case of an inventory pile-up, Perschke said, "There is demand for our products and the luxury car market has grown this year due to over 30-40 per cent growth posted by Audi."ET has found the discounts on the Mercedes C Class range between Rs 1.5 lakh and 3 lakh, depending on the variant and dealerships, Rs 4-6 lakh on the E Class and about 8 lakh on the S Class. Mercedes-Benz declined comment on the discounts prevailing on its cars.In case of BMW, the discounts were limited to those being offered by its dealers.

"The company is offering sales support on some of the outgoing models, but we are not offering discounts. Dealers on their part may be offering discounts based on their stock situation," BMW Group India President Philipp von Sahr said."The current level of discounting seen in the market is detrimental to the luxury car market," Sahr added, pointing out that the discounts currently available on luxury cars are unique to India and that such price wars are not sustainable.Sahr said in a meeting last Saturday the company had asked its dealers to desist from offering any discount from the next year as discounts impact the image of the luxury products. "On the contrary, we are increasing prices up to 10 per cent from January 1," Sahr said.Another senior official of BMW said that attractive offers are available through BMW Finance on some models. The operating margins of the luxury carmakers are under pressure due to the twin blows of discounts and the rupee depreciation.


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