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MUMBAI | HYDERABAD: BMW and Mercedes Benz will soon drive in their luxury hatchbacks to open up a new flank in the fiercely competitive Indian luxury car market where Audi has taken the lead. At least four luxury hatchbacks and a crossover in the Rs 20-30 lakh bracket will hit the road over the next 12-18 months, industry official said. 

This will add an all-new segment in the luxury car space, and, if Indian luxury car buyers accept hatches, may lead the market back to its strong double-digit growth, say experts. If not, the mid to long-term potential of this market may stagnate a bit, say experts.

Mercedes Benz is making the first move with the launch of `A class` by the end of this month, which will be followed by the B Class diesel. Swedish carmaker Volvo will bring in its V40 crossover in June.BMW has lined up 1 Series for festive season and Audi too is studying the launch of A3 in the market, over the next one year or so.

Eberhard Kern, president & MD at Mercedes Benz India, says luxury hatchbacks is the most promising segment in the Indian market. "As the Indian economy develops, there are more people who move into the higher middle class bracket. They open up a new customer base altogether: there are young professionals; there is a second and third generation of customers coming in; we also see more female customers coming in," he says.

"There are a number of reasons why we are bullish on this segment and the Indian market," Kern adds. "Indians still pay a premium for the boot. That is why people did not buy Honda Jazz hatchback as against a Honda City sedan, they didn`t see value in it," Pradeep Saxena, executive director at market research firm TNS Automotive, says. "I think the luxury hatchback segment will add incremental volumes, but it won`t be large numbers, it will create its own niche in form of a second car in the family which already owns a luxury car," he says. But BMW and Mercedes Benz are positive about luxury hatchbacks. And their success could be critical for these two German carmakers whose volumes are under pressure in 2012.

BMW India, which recently ceded the number one position in India to Audi, has seen its market share fall from over 40% in 2009 to about 30% in 2012, whereas Stuttgart-based Mercedes Benz`s market share almost halved to 25% in the last five years. Audi, meanwhile, has seen its market share growing almost five fold to 30%.

The luxury car market in 2012 grew by about 17% to around 28,500 to 29,000 units driven by Audi, which grew 63%. Jaguar-Land Rover and Volvo, too, posted growth of 32% and 150%, respectively, albeit on a low base.

Philipp Von Sahr, president of BMW Group India, says that with the economy going through difficult times, additional models like 1 Series will be a corner stone for their volumes growth in 2013.

"The 1 Series will help us counter the overall weak environment for the current year. The new models along with the expanding network will help us grow volumes in 2013," he says. "The 1 Series is one of the most sold cars for us globally. In India, despite its compact dimensions, it will be a premium luxury car and will target a different group of buyers." According to Mercedes Benz`s Kern, the New A-Class launch reflects the changing trends globally of adapting to "Compact" luxury as witnessed in other categories like phones and electronics.

"We feel the consumers in India also are similar in their outlook compared to global peers and they would surely like the `New Mercedes-Benz design language` as personified by the A-Class, which as you know was able to lap up over 90,000 bookings in Europe alone within a month of launch," he says. Michael Perschke, head of Audi India, says his company too is studying an entry into the segment, but feels the Indian luxury hatchback market is not yet ready.

"I personally feel that the Indian market for luxury sportback is not yet ready. In India, when people spend a certain amount of money to buy a luxury car, it is still about price to size - they are still looking for sedans and limousines demonstrating their indulgence in luxury," says Perschke.
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