Tough Competition among Luxury Cars

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DON’T ever think that one cannot proudly drive around and show off in a luxury car in a developing country like Indonesia. Just take a look at Jakarta’s streets and you will see that they look like luxury showrooms on the move presenting world-class brands, such as Mercedes-Benz, BMW, Cadillac Escalade, Porsche, Hummer and even Rolls-Royce.

In view of this conducive situation, a number of car manufacturers feel confident about the Indonesian market. PT Mercedes-Benz Indonesia is ready to produce more classy variants, especially since the sales of the E-Class series have increased by 20 percent and are double the sales of the C-Class.

Mercedes-Benz is rightly proud of its achievements in 2009, during which it posted sales of 2,884 units, accounting for more than 68 percent of the premium market. The sales figure reflects a 19 percent increase from the 2,424 vehicles sold the previous year. The company is determined to keep control of the market for luxury cars in Indonesia. “Looking at the success that we gained in achieving the target last year, we are optimistic that we’ll achieve the target this year,” said PT Mercedes-Benz Indonesia president and CEO Rudi Borgenheimer.

The C-Class dominates the sales of middle-premium class cars following the sales of 1,116 units, with a 63.7 percent share of the market. What is surprising is that E-Class premium class sedans were Mercedes-Benz’s biggest sales contributor, with 1,259 units sold that reflect an 82.6 percent market share.

In the higher-premium class, 248 S-Class were sold, accounting for a 74 percent market share. Meanwhile, for SUV segment, M/H/ML Class recorded the most sales with 120 units sold, accounting for a 27.8 percent market share.

Mercedes may still be the market leader in luxury cars here but this does not mean that other brands are not being innovative both in their products and marketing strategies. Volkswagen AG, for example, is ready to challenge any brand, including German brands. It has prepared a number of new variants by relying on products from Audi in the VW group until 2015.

In preparation, Audi said that it would invest 7.3 billion (about Rp 98.7 trillion) in developing new variants and plant improvements for production starting in 2012, as quoted by gasgoo.com at the end of last year. Out of the total budget, 5.9 billion will be used to create new models or about 81 percent of the total budget since 2009.

The fresh funds are part of the master plan of the VW parent company, which is headquartered in Wolfsburg, in order to become a world leading automotive plant.

Currently, Audi has 34 car models, with another eight new models to be launched in 2015. Audi is under the umbrella of BMW and Daimler AG Mercedes-Benz. “BMW and Mercedes have to start thinking seriously about Audi. Volkswagen is now spending a lot of money on Audi to turn it into the best luxury or premium car. It is possible that Mercedes will drop to second position early next year,” said Ferdinand Dudenhoeffer, director of the Automotive Research Center at Duisburg-Essen University, Germany.

Of course, the Audi preparation and strategies are currently focused at its headquarters, but they will soon turn into its global marketing policy that will affect many countries where Audi is sold, including Indonesia. Hence, competition among luxury cars will certainly become tougher.

To face the competitive market, BMW is also launching new models, such as the BMW X5 M, which is the first all-wheel-drive with a new V8 turbo engine with 4,400 cc capacity priced at between Rp 2.2 and Rp 2.4 billion. “We have prepared 10 BMW variants for 2010. The last one we’ll launch is the BMW X6 M, which is positioned as a sports activity vehicle or simply a sports car,” said Ramesh Divyanathan, the company’s president director.

Indonesia is indeed a haven for carmakers, because almost any brand sells like hot cakes. Price does not seem to matter here, because somehow Indonesians can afford to purchase luxury cars, which have become a symbol of prestige and achievement. So the more expensive and the more luxurious, the better, they say.

According to Association of Indonesian Automotive Industries (Gaikindo) secretary-general Freddy Sutrisno, premium car sales here will grow 20 percent, with total sales amounting to about 4,500 units in line with the improving economy. This projection is based on the assumption there will be no tax increases, including luxury tax.

Lexus Indonesia general manager Soedigdo agreed, saying the conducive economic climate had created nouveau riche that could afford luxury cars. To boost the company’s sales this year, Lexus will release a new hybrid car, the LS600h.

He said that in line with the positive economic development in 2010, cars priced above Rp l billion would not be difficult to market. “The market is going to improve much more as long as there are no taxation problems, such as hikes in luxury tax and progressive tax,” Soedigdo told Bisnis Indonesia daily.

PT Eurokars Artha Utama Indonesia is also optimistic about the economy as can be seen by the fact that the company will bring Rolls-Royce to Indonesia. The entry of this brand will indeed heat up the competition among luxury cars here. “After entering Malaysia, we will bring the car to Indonesia,” said PT Eurokars Artha Utama marketing and sales vice president Yudhi W Widodo recently.

The Rolls-Royce model that will be introduced here is the Ghost, which has an exotic appearance and an extremely powerful engine. It has a V12 twin turbo 6,600 cc engine with 563 horsepower and torsion of 780 Nm at 1,500 rpm. With an automatic transmission, it can accelerate from 0 to 100 km per hour in just 4.7 seconds and has a maximum speed of 250 kph. One does not have to doubt the ultimate luxury of the Ghost. (Reyhan Fabiano)

The Jakarta Post

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