From Aurangabad to Jalgaon, Mercedes-Benz wants to make inroads in India's hinterland

MUMBAI: Aurangabad, an industrial city in the backward region of Marathwada in Maharashtra, shocked the country eight years ago when locals bought 150 Mercedes-Benz cars worth Rs 65 crore. A few months later, another set of locals placed a joint order for 101 BMW cars. "We want to show the world that Aurangabad is no more backward but ahead of metropolitan cities," said one of the buyers.

Mercedes-Benz India must have made a note of what the buyer said. Known for catering to the rich in metropolitan cities, the company is now focusing on Tier II and III cities in India. It had started looking for buyers long ago but now it wants to ensure that these buyers get quality service where they are.

Good roads and rising wealth in the interiors have given the elite brand enough reason to move away from the metros.

Mercedes-Benz is strengthening its go-to-market strategy to reach out to premium customers in tier-II and tier-III towns. The company is tapping 15 such markets including Jalgaon, Gandhinagar, Jamnagar, Valsad, Kutch, Amravati, Udupi, Bellary and Dharwad this year to make basic service available for a luxury car buyer in these places, according to a TOI report.

The German carmaker is planning to launch a ‘service-on wheels’, a custom-built Bharat-Benz 40T tractor-trailer equipped with mobile lifting platform, diagnostic equipment, standard and special tools with a customer lounge area. This will not only offer convenience to customers but make vehicle care locations, distant from existing service networks, more accessible.

Currently, tier-II and tier-III towns account for around 15-20% of Mercedes-Benz India’s overall sales, and expects it to increase with the help of such initiatives. The company, which opens 10-12 outlets a year, currently has 93 outlets in 45 cities.

In March. Mercedes-Benz announced the launch of its unique customer-centric programme ‘Mercedes-Benz Brand Tour’ to strengthen its outreach in the emerging Tier II and III cities.

The Brand Tour focuses on reaching out to regions with potential customers, who have always aspired to own a Mercedes-Benz, but have not had the chance to experience the brand due to an absence of a showroom in their city. Mercedes-Benz commenced the Brand Tour by travelling to Aurangabad, Udaipur and Allahabad and planned to travel to 11 more cities including Haldwani, Ranchi, Arunachal, Shimla, Thirunalveli, Vizag, Gandhinagar. Vapi, South Goa, Kannur and Shimoga.

After posting record sales in 2017, India’s luxury-car market is on course to hit a new peak this year. Sales have topped 20,000 units in the first half of the year, expanding in double digits every month through June with an average growth rate of 12-13%. Total sales for 2017 were about 39,000 units, a 17% increase over the year before.

“We have seen Tier I and II cities with high sales potential emerging as key hubs of future growth. This is an encouraging trend highlighting the market potential of smaller towns in mid to long term and we will continue our expansion drive there,” CEO and MD Roland Folger said.

BMW India too looks at small towns as the next frontier to drive growth. BMW is also focusing on hinterland, opening outlets in Ranchi, Aurangabad and Madurai recently. It also plans to open dealer outlets in seven cities it plans to expand by the end of 2018.

Improved road infrastructure in the interiors of the country is a big factor behind sales of luxury cars. Moreover, fascination for electric cars among the metropolitan elite is not a positive signal for luxury car makers.