Luxury Cars: How Used-car Market & Dealership Stores Are Fostering Growth In Tier II, Tier III Cities Companies such as BMW, Mercedes-Benz, Audi, Lexus see potential in emerging markets of Tier II and Tier III cities which are growing rapidly

Today, luxury car makers are betting big on smaller towns: Companies such as BMW, Mercedes-Benz, Audi, Lexus see potential in emerging markets of Tier II and Tier III cities which are growing rapidly. The pre-owned car market and the number of dealership stores in smaller cities play a significant role in the penetration of luxury cars.

Audi India's pre-owned cars business witnessed the strongest-ever sales with a quarterly growth of 50 per cent. "We currently have more than 300 cars available on the Audi Approved: plus portal across the country. In the past two to three years, the market for pre-owned cars has increased, especially in Tier-II and Tier-III cities. Our Audi Approved: plus (pre-owned) car business has grown from 7 facilities in 2021 to 23 facilities at the moment in order to meet this rise in demand," said Balbir Singh Dhillon, head of Audi India.

BMW Premium Selection plays an important role in the success of the company. It is the first structured pre-owned premium car business in India and is distinguished by its exclusive approach. BMW Premium Selection has provided a vital impetus to BMW operations in India and has introduced many new customers to the BMW brand, especially from the non-metros. Buying a pre-owned vehicle allows customers to experience the product substance, customer service, sales and aftersales process. This is an important decision-making factor for customers who are looking at new car purchases in the future. BMW Premium Selection acts as a stepping stone into the world of luxury for many near-premium customers who consider upgrading to become first-time luxury buyers. "BMW Premium Selection has provided a vital impetus to BMW operations in India and has introduced many new customers to the BMW brand, especially from the non-metros," said Vikram Pawah, president and CEO, BMW Group India.

Sharing a similar opinion, Lance Bennett, VP-sales and marketing, Mercedes-Benz India, said, "Mercedes-Benz Certified, Mercedes-Benz Marketplace and the newly launched pre-owned cars online store enable customers to select a car of their choice from the available range of pre-owned Mercedes-Benz cars. The flexibility and trust of these programs have resulted in significant growth in sales in mini metros."

For Lexus India, almost 40 per cent of its sales in the pre-owned luxury car sector is contributed by the Tier II and Tier III cities. "This upward trend is taking place parallel to customers getting interested in the opening price ranges of the luxury car brands, leading to a simultaneous growth in the market," said Naveen Soni, president, Lexus India.

Dealership Stores

Luxury cars are now bringing dealerships of international standards to India. BMW Group India aims to grow the size of the Indian luxury car market with strong and dedicated dealer partners. "We have set a decisive course by establishing over 80 touchpoints in 35 cities across the country and remain customer-centric by setting very high benchmarks in service quality and customer care," said Pawah, CEO, BMW Group India.

Mercedes-Benz is present across 45-plus cities with over 123 touch points. In terms of sales channel, Mercedes-Benz launched the 'Direct to Customer' model in 2021 – Retail of the Future (ROTF). "With our new business model, ROTF, Mercedes-Benz India sets the price, provides inventory, invoices to customers directly. The customers get the best price guarantee, a seamless purchase process, complete transparency and the best customer experience. This is an omni-channel model spanning across both traditional and digital retail format thus building a strong focus on e-commerce as customers can finish the booking process from their homes," said Bennett from Mercedes-Benz India.

Lexus India has established an extensive presence with 23 touchpoints positioned in 16 vibrant cities. "Over the last year, we have added eight Lexus service points. We are also opening smaller brand spaces called Meraki," said, Soni, president, Lexus India

At the beginning of last year, Lexus had 56 per cent of the market covered with seven main cities. The company added eight service points to this and already have added one Meraki in Gurgaon, one in Coimbatore and one more in Pune as well. "With this, by the end of the year, we are planning to be close to 85-86 percent of the market. Beyond this, we have also launched Lexus Virtual Dome- an online experience touch point that will enable our guests to experience Lexus virtually. Our plan is to open more of these service points, which could take us to around 90 per cent of the luxury car market, wherever Lexus is present," added Soni.