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Business Headlines News

Car manufacturers shift to economy models

Chennai, Apr 25 () : Car manufacturers from Germany are shifting track to small and low-cost vehicles to capture the Indian market.

BMW, Audi and Mercedes-Benz , all known for producing expensive cars have decided to drop the assembling line production and go in for domestic production of parts etc. in India. A fully manufactured car in Indian plant works out cheaper than just having it assembled here.

The idea is to make cars for the middle class and the young woman drivers. A first set of hatchbacks from Mercedes Benz is to roll out in the A and B Class series. This is intended for the woman drivers’ segment and is hopeful of getting a double-digit growth.

Even though luxury cars can be spotted across various star hotels and mansions, the figures are very dismal compared to China. Only one percent of the total car sales account for luxury cars while China had 7 % of the total sales.

Indians prefer compact and small cars and 75% of the sales for every car maker comes from the sales of such type of vehicles. Toyota and Volkswagen sales are driven by these kind of cars.

Figures show that the sales of luxury cars fell by 14% compared to the sales a year before. The luxury car manufacturers are finding difficult to get buyers who value a brand name like BMW. To beat this, Benz is now coming up with small cars in three months with commitment like giving a guarantee on resale prices.

Now, luxury car makers are dropping the idea of bringing knocked down kits and assembling in India since the import taxes were added to the cost. Volkswagen, BMW and Audi now want to manufacture many models not introduced in India in their Indian plants.

Mercedes having given guaranteed resale values on new cars in India, has increased payment options on loans and is wooing the youth aged 18-25 to race its cars internationally.