Managing Across Borders: Challenges Faced by Mercedes-Benz in Indian Market

This document discusses the challenges faced by Mercedes-Benz in the Indian market and the strategies adopted by the company to overcome them. It also highlights the factors that impact the performance of luxury car brands in India.

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Mercedes Benz made an entry in the Asian Market or too be more precise in India in the
year 19996 and in the month of February launching its first premium car to dazzle on the Indian
roads (Yao and Schwarz, 2017). However with the eventual expansion of the automobile market
in Indian and more bigger and luxury car brands entering the segment for instance International
luxury car brands ranging from the sporty Porsche to the regal Rolls-Royce the main question
that rose was how much demand sensitive is the Indian Automobile market when it comes to
such high end luxury cars or how suitable are the roads for driving such high end
consumer vehicles (Najeemudeen and Panchanatham, 2014).
This is perhaps the biggest question that the firm is facing in the present Indian premium
car market demand scenario and altogether is identifying a challenging scenario in expanding its
ales in the Asian Market and particularly in India. Some of the major concerns that led to a
lowered sales of Luxury vehicle manufacturers in India particularly in the ending note of 20218
was: ill effects of high import cost coupled with high depreciation of rupee along with a
liquidity crunch significantly impacted the demand and sale of Mercedes Benz in the Indian
Market scenario. Another significant challenge that came in the way of these luxury car brands
was the legislative regulation which mandated the car owners to take three year insurance cover
which in turn made the car prices turn dearer. Going by the financial records from Registrar of
Companies Mercedes-Benz observed a 1.7 per cent drop in their revenue generation (Ahuja and
IBA, 2014). Pertaining to these challenges Mercedes-Benz is continuously trying to expand its
customer base to strategies a successful comeback strategy. Moreover the company is also
cautious about the nature of Indian consumer as the Indian customers have a high value driven
approach (Ramita Verma, 2013). The customers are much more concerned with the quality than

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the price and expect the best return of their monetary investment. Therefore Mercedes- Benz
needs to consider another crucial factor which is designing and manufacturing such vehicles
which are suitable to be driven on Indian roads as the terrain of India is quite from that of other
lands. Indian terrain does not support the driving of such luxury sports cars. There are hardly any
such highways where the car owners can drive above a speed of 300 kilometer per hour (kmp) as
the roads are filled with bumps and potholes (Gupta, Trivedi and Kansal, 2013). This has
significantly impacted the sale of high end luxury cars. Moreover the strict market competition
that Mercedes is facing from smaller players like Volvo and Jaguar Land Rover (Iravani, Dasu
and Ahmadi, 2016). Apart from the above mentioned challenges there are various other
undulating factors which might be beyond the control of the concerned company like the
economic condition of the country, the earnings of the major chunk of population along with
other socio-cultural and psychographic factors which includes factors like brand loyalty,
consumer usage rate which paly considerable role in determining the overall performance of the
company.
Therefore to sustain in this challenging environment the company is increasingly
investing to grow in its SUV Segment and is applying strict regulation towards maintaining
higher ethical standards pertaining to emission and safety issues to prevent the company land
under any legal hassle.

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References:
Ahuja, M.P. and IBA, G.N., 2014. Luxury Cars: A New Definition of Necessity in India.
International Journal of Commerce, Business and Management (IJCBM), 3(2).
Gupta, A.K., Trivedi, M.K. and Kansal, R., 2013. Risk variation assessment of Indian road PPP
projects. International Journal of Science, Environment and Technology, 2(5), pp.1017-1026.
Iravani, F., Dasu, S. and Ahmadi, R., 2016. Beyond price mechanisms: How much can service
help manage the competition from gray markets?. European Journal of Operational Research,
252(3), pp.789-800.
Najeemudeen, K.P. and Panchanatham, N., 2014. Automobile Industry In India–Yesterday,
Today And Tomorrow. Empyreal Institute of Higher Education, p.59.
Ramita Verma, M.B.A., 2013. PEST Analysis for Indian Luxurious Car Market.
Yao, Q. and Schwarz, E.C., 2017. Transnational venue management corporations and local
embeddedness: A case study on the Mercedes-Benz Arena in Shanghai, China. International
Journal of Sports Marketing and Sponsorship, 18(1), pp.70-80.