Mercedes to enter tier-II and tier-III cities

Mercedes-Benz India is planning to enter tier-II and tier-III regions of the country. The German luxury car brand aims to sell roughly 50 cars per year in these regions.

The company has not finalized which new markets in the tier-II and tier-III regions the company will expand to but plans to open outlets in 7 – 10 tier-II and tier-III cities in the next 3 – 5 years.

Financial arm for Mercedes-Benz India

Mercedes-Benz is planning to launch a financial arm in India by mid-2011. Known as the “Daimler Finance Services (DFC), currently, this firm offers finance to Mercedes-Benz buyers in 40 countries worldwide.

mercedes-benz gl500 suv photo
Photo: Mercedes-Benz GL500 SUV

According to the Business Standard T.Honegg Director and CEO for Mercedes Benz said that it was too early to say what kind of impact the DFC will have on sales figures. He added that it will be difficult for Mercedes-Benz to compete with banks in offering financial help to customers; however, the company can offer an array of service packages.

It has to be noted that BMW an arch rival to Mercedes-Benz, opened its vehicle-financing subdivision, BMW Financial Services, in India with an initial investment of $50 million (Rs 221 crore) in October 2010. Vehicle finance in emerging markets like India is an important business strategy to encourage customers to purchase a particular brand’s vehicles. Also read: Mercedes Benz India clocks it’s highest ever sales in 2010.

With respect to sales volume, Mercedes-Benz has been the second largest luxury car brand in India, after BMW for the past two years. Mercedes-Benz could be exploring tier-II and tier-III cities in order to reclaim the No. 1 spot in the Indian luxury car segment. Last year, Mercedes-Benz registered a record sale of 5,819 cars, 80% more than the 3,250 units sold in 2009.

In India, Mercedes-Benz sells C, CL, CLS, E, S Class luxury sedans, M, GL, R Class luxury SUVs and SL, SLK and SLS AMG performance-oriented sports cars. The C Class and E Class are the volume driving models for the Mercedes-Benz. Also read: Mercedes Benz SL 350 and GL 500 India launch on May 3rd

The Mercedes-Benz brand has a big reputation in India that the company has tasted instant success even in pre-owned business. Mercedes-Benz was the first premium car brand to start a pre-owned car business dubbed “Proven Exclusivity” in the country in June 2010. Within 6 months, the company sold more than 600 used cars.