beyondbrics

Not long ago, cars were leaving Indian salesrooms almost unaided. But higher interest rates have brought soaraway sales to an end and a price war is now underway.

As well as lower prices, distributors are offering extended warranties and even chauffeurs to accompany luxury cars. Now several big manufacturers have opened cafés, studios and airport lounges in a bid to reinforce their brands and pamper their customers.

“This is a fundamentally different type of shop. These lounges are not sales outlets, they are just showrooms you visit to experience the product while doing your weekly shopping in a mall or when travelling,” said one auto industry analyst.

BMW’s “studio” in New Delhi invites potential customers to “Enrich yourself with comprehensive information on BMW products and services and stop by today to view our newest car on display.”

Mercedes-Benz has a “star lounge” at New Delhi’s Indira Ghandi airport will a gull-wing car on display and plenty of branded trinkets and clothing on sale.

Lower down the price range, Ford has been operating temporary cafés in shopping malls since April. Fiat is set to follow next month, opening cafés in New Delhi and Pune in conjunction with Lavazza, offering Italian coffee and food and complete with a cultural space for art exhibitions and film shows.

“Luxury car selling is about selling a lifestyle, and airports are the right points as icons of lifestyles for our customers,” said Debashis Mitra, sales and marketing director at Mercedes-Benz India. Existing car owners get access to the Mercedes star lounge by entering their car registration number. Others can pay to experience the hospitality.

Meanwhile at Ford’s cafés, customers can sip coffee and chew sandwiches while experiencing the company’s technology.

“Realising that the Fiesta is an all-round expansion of the personality of the young and upwardly mobile customer with its new connectivity and entertainment features, Ford introduced a unique and interactive ‘Fiesta Café’ at its reveal pavilion,” Ford explained.

But setting up these non-selling showrooms is expensive. Mercedes’ lounge cost 25m rupees ($550,000) – raising the question of what sales it will generate. Analysts say it is hard to tell but reckon the project can’t be that successful, noting that many such spaces are temporary or are shutting down – although Ford stressed it had always planned its cafés as a temporary exercise.

Mercedes, however, is planning to expand its presence across the country’s airports over the next two years, Mitra told beyondbrics.

Whether the cafe strategy will help it win over clients from BMW, its arch rival, remains to be seen.

Related reading:
Indian car sales: still hot, beyondbrics
Rural demand drives India car sales record, FT
India car sales to slow up in 2011, FT