Luxury Brands in India Must Reinforce a Premium Image During Sales Experience

Mohit Arora

Mohit Arora

The luxury vehicle market in India has grown in recent years, with premium sales reaching 26,000 units in 2013. This number is expected to triple to 84,000 units by 2020, according to our strategic partner LMC Automotive. In addition, an increase in the number of luxury models available in India, coupled with attractive financial options that enhance affordability, has helped the luxury market to grow.

Success, however, brings with it additional challenges for premium brands. Sales growth adds pressure for luxury brands to differentiate themselves from the mass market brands. According to findings in our 2013 India Sales Satisfaction Index (SSI) Study, overall satisfaction with the sales experience in the luxury segment averages 873 points on a 1,000-point scale. Although the luxury segment average is 31 points higher than the massmarket segment average (842), this index score is not a major differentiator for these brands, based on study results.

The price of luxury vehicles is much higher than the price of mass market vehicles. We see that customers expect luxury brands to provide a truly differentiated experience to enhance the value of ownership of these vehicles. The current network of dealers does not provide the level of differentiation expected to reinforce the premium image of luxury brands among these more demanding customers. Continue reading ›

Building Loyalty, Improving Service are Keys to Satisfaction in Germany’s Auto Market

Mark_Lendrich

Mark Lendrich

In light of a less-than-robust outlook for new-vehicle sales in Germany during the next few years, automakers and dealers need to focus on loyalty, awareness of crucial factors that influence the purchase decision, and they need to improve service business, according to our 2013 Germany Vehicle Ownership Satisfaction Study (VOSS), a collaborative effort with AUTO TEST, the magazine in Germany for readers planning to buy a new car.

In 2013, overall satisfaction among owners of one- to three-year-old vehicles in Germany averages 789 points (on a 1,000-point scale). In the 2013 study, vehicle appeal, which accounts for 27% of the index weight, and ownership costs (25%) are the two key drivers of overall satisfaction. The remaining two factors evaluated and their weights are: vehicle quality and reliability (24%); and service satisfaction (23%). Continue reading ›

Will Luxury Car Buyers in India Feel the Pinch?

Mohit Arora

Surinder Singh (a fictitious name) currently drives a BMW 3 Series, is the male head of household and earns anywhere from Rs 1 lakh to Rs 5 lakhs (US $1,954 to US $9,770) or…infinity. This is the typical profile of a luxury new-car buyer from our 2011 India Sales Satisfaction Index (SSI) Study.SM

In March 2012, India’s Finance Minister Pranab Mukherjee announced a hike in the basic customs tax on luxury cars. Large cars (excluding imported models) over 4 meters in length and with engine size larger than 1.5L are subject to a new excise duty of 27%—up from 22% + Rs 15,000 (US $293) of the fixed duty. This means that luxury vehicles are set to become more expensive in India—by up to Rs 3 lakhs (US $5,748)—as automakers are compelled to pass on the additional burden to consumers.

Given the substantial increase in cost to the consumer, the question to consider is: Will the price hike deter buyers like Mr. Singh from making a luxury car purchase in the future? Continue reading ›