War of financing widens reach for aspirational luxury cars
Increasing competition often forces companies to think out of the box. And when it comes to fighting it out for the top slot in the domestic luxury car space, it can only mean one thing — how to make the cars more affordable. HT reports.autos Updated: Jul 21, 2010 00:49 IST
Increasing competition often forces companies to think out of the box. And when it comes to fighting it out for the top slot in the domestic luxury car space, it can only mean one thing — how to make the cars more affordable.
While doling out discounts is considered anathema to market leaders such as Mercedes Benz and BMW, it is car financing that is witnessing greater innovation.
The range of options on the entry-level C Class Benz, for example, includes a 0 per cent interest rate for a 3-year loan or a low EMI of Rs 29,299 for a five-year period. Though the on-road prices of these cars are well over Rs 35 lakh, schemes like these do bring the vehicles within the reach.
"The Indian luxury car market as yet is small but it is on the verge of exponential growth," said Wilfried Aulbur, Managing Director and CEO, Mercedes Benz India. "The challenge before us is to utilise the potential fully as more and more wealth is being generated across the country. The key to this is to bring the right products at the right price without compromising on profitability."
None of the Mercs, BMWs or Audis is on discount but almost all of them offer financing options that will be customised to suit your needs.
"The luxury car space is witnessing the most intense competition in over a decade," said an analyst. "Competition in India mostly leads to discounts but here that is not an option. Hence there will be more aggressive marketing strategies hinging on low EMIs and 0 per cent interest schemes. While it does not open up a whole new market for companies like BMW or Mercedes as the sticker price remains the same, it does make buying a luxury car more convenient."
"BMW has its own finance arm and that gives us more flexibility to alter the terms of the car loans," said BMW India spokesperson. "Though we do not go out of the day to proclaim what we offer, one can get 0 per cent interest rates or low EMI options on almost all cars."
At the backdrop is the intense competition between the German troika that is turning into a slugfest. In 2009, BMW stole Mercedes' thunder by de-throning it from the number 1 slot. But in the first half of this year, Mercedes has hit back to retain the coveted position. Experts believe the war of financing will be the key to decide the winner this year.