The report titled “Case Study-Premium Car Exchange Market in India- Focus on Audi, BMW and Mercedes with Concentration on Marketing Initiatives” provides detailed overview on the Premium car exchange business in India. This report helps readers to identify the ongoing trends in the industry and anticipated growth in future depending upon changing industry dynamics in coming years. The report is useful for premium car manufacturers, authorized and unauthorized used car dealers, service centers, online portals and other stakeholders to align their market centric strategies according to ongoing and expected trends in the future.
Luxury car manufacturers and thereby the car dealers have put dedicated efforts towards marketing and promotion of their new product launches as well as incentive schemes for the buyers. However, the companies have divested their focus to promote exchange business as well. There are couples of factors that have led the dealers to enhance focus on exchange business
1. The luxury car companies have instigated separate department for pre owned car segment, which deals with purchase and sales of used car as well as exchange business. This segment tends to generate higher profit margin for the dealers, as the dealer sell the car at a higher price after the repair.
2. The luxury car manufacturers in the wake of rising competition have increased the launch of newer car models. This has led to surge in preference for car upgrade.
The mode of communication for the car exchange at the dealer level is made through below the line advertisement (BTL) and direct communication with the customer. Each dealer for the luxury car brand always has a target for new car and used car sales, which they have to achieve. High customer acquisition costs motivate dealers to convert store traffic to sales using aggressive tactics that extract differential margins based on customers’ willingness to pay.
A new trend which has been launched in premium passenger car market is the exchange scheme launched by car makers. Before 2014, the sale of new cars through exchange of existing cars was not approved by Audi India and hence the exchange was made at the dealer level without any support from company with no separate pre owned department existing in the space for Audi. During 2014, the company launched a separate pre owned department for Audi named as Audi Approved plus, which was held responsible to look for the car exchange and pre owned cars.
Mercedes has relatively higher growth of exchange business primarily due to attractive and the highest exchange bonus which are passed to the customers. Currently, Mercedes is offering a cash discount as exchange bonus to the customers who wish to trade in their car to buy newer one. Out of this bonus, 50% is only provided if the customer purchase car through finance.
BMW, in lieu to grow their exchange business offers cash exchange bonus to the customer who wishes to trade in their existing car. The company offers the option to the consumer that allows returning the vehicle. If the trade-in valuation is higher than the Assured Buyback, the balance is used towards the purchase of newer BMW car.
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Ankur Gupta, Head Marketing & Communications