Presentation on ETOP for “Luxury Car Segment “

Luxury vehicle is a marketing term for a vehicle that

provides luxury — pleasant or desirable features beyond strict
necessity—at increased expense
 
Though widely used, the term luxury is broad and highly
variable. It is a perceptual, conditional and subjective
attribute and may be understood differently by different
people: "What is a luxury car to some... may be 'ordinary' to
others
 
R.L. Polk and Company, a global automotive information and
marketing firm that provides solutions to automotive and
related industries, has defined the term "super luxury"
segment for luxury cars costing more than $100,000 USD.
This bracket includes the entire lineup of Rolls Royce, Bentley,
Aston Martin, and Maybach The top-performing variants of
flagship cars from Audi, BMW, Mercedes-Benz and Jaguar are
often included here.
 Six Forces Analysis
New entrants
• To enter the market of luxury cars is an extremely
complicated and expensive venture.

• Constructing new plants with the required highly skilled

and experienced labour force is impossible for a company
to do in a short time-span.

• For example, Lexus cars are only produced in five plants.

• Economies of scale are a large factor in this industry. As

evidence, the major players in the general luxury car
industry are primarily global brands such as BMW,
Mercedes-Benz, Lexus, and Porsche.
• Cost is not a primary concern of luxury car manufacturers,
quality is
Supplier Bargaining Power
• Supplier bargaining power is very low. For parts and raw
materials, there are many suppliers and many different
options available to Luxury car manufacturers.

• In fact, Luxury car manufacturers can demand lower prices

by buying in bulk.

•India is the world’s second largest producer of automotive

parts. Therefore, if Luxury car manufacturers were to
establish a plant in India, it would benefit from having a large
source of parts and would not be threatened by a supplier
holdout for higher prices.
Substitutes
• There are many possible substitutes for any luxury car for ex.
say Lexus in India. The most obvious is from other luxury cars
manufacturers, such as Mercedes-Benz, which has a strong
following in India already.

• Another substitute is a lower quality car.

Rivalry

• Rivalry is relatively low in this market. In general, price

competition is moderate in the luxury car market; price is a
secondary concern to customers who care very much about
the quality and reputation of the car.

• Indian economy is one of the fastest growing in the world.

By 2035, India is expected to have the world’s 3rd largest
economy, and the demand for automobiles is expected to
grow likewise. This increase in demand will likely exceed
supply and decrease rivalry, thus allowing every company
to increase profits without harming the others.
Complements

The complements are numerous. Among them is

infrastructure – roads and gas stations. By far the
biggest complement is a network of dealerships.
Dealerships are crucial points of sale and service of all
luxury cars. Simply their presence serves as a
constant reminder and advertisement to the quality of
the brand. As the face of the company to the
consumer, they are often quite luxurious themselves.
Lexus dealerships cater to the upper class, fully
furnished with high-end furniture, computers,
complimentary refreshments, and other amenities.
 SWOT
Analysis of
Segment
 Strengths
• Strong reputation in automobile industry. It symbolizes
reliability, affordability, and luxury.

• As the Indian luxury car segment is growing rapidly, the

introduction of the new brand in India would fill a profitable
niche, given the pre-existing presence of brand such as Toyota.

• A well-established network dealerships and service centres in

India, maintaining brand in India should be a feasible task.
 Weaknesses
• Few large scale production plants in India. Therefore, importing
luxury cars to India generate transportation costs and import
duties.

• needs to set up more production plants, as well as redesign

some of its models to adapt to India’s poor roadway system.

• Corruption is a recurring problem in India. Unless the companies

can manage to find a way to circumvent corruption, it could cause
the company to lose money or to compromise the quality of their
products
 Opportunities
• The Indian luxury car market is thriving with a growth rate
of 28% per year.

• There is a lot of market potential for new entrants. With a

population of 1.1 billion that is growing at 2% per year, and
an economic growth rate of almost 10%, market demand is
very high.
 Threats

• New entrant will face threats from other, lower

level brands, such as Nissan, Honda, Ford and
GM, as well as Indian companies like Tata,
Maruti-Suzuki, and Hindustan Motors.

• Many local car companies, such as Tata, strong

local presence and brand recognition will make it
difficult for international companies to compete.
 Rolls-Royce plc
The Rolls-Royce group is a global business with
customers in 135 countries and production
facilities in 14 countries.

As one of the most powerful brands in the world,

Rolls-Royce symbolises a promise to deliver
reliability, integrity and innovation to buyers and
users.
 Strengths
• High R&D
• Innovation
• Loyal customers
• Market share leadership
• Strong brand equity
• Highly diversified group.

 
 Weaknesses
• Diseconomies to scale
 Opportunities
• Acquisitions
• Emerging markets and expansion abroad
• Product and services expansion
 Threats
• Competition
• Economic slowdown
• External changes (government, politics, taxes,
etc)
• Lower cost competitors or imports
• Product substitution
 Importance Impact
Factor (0 - 10) (-5 < Impct<+5) opportunity Threats

Political 5 -1 -5 

Economic 8 +3 +24  

Social 8 +3 +24  

Legal 7 0  

Technological 8   +2  +16  

Supplier 7  -1   - 7
Rolls Royce Phantom - the Phantom costs at Rs 3,50,00,000 - Rs 3,50,00,000 (ex-showroom, New Delhi).
 BENTLEY
• Bentley Motors Limited is a British manufacturer of automobiles
founded on 18 January 1919 by Walter Owen Bentley known as
W.O. Bentley or just "W O". Bentley had been previously known
for his range of rotary aero-engines in World War I, the most
famous being the Bentley BR1 as used in later versions of the
Sopwith Camel.

• After the war W. O. Bentley designed and made production cars

that won the 24 hours of Le Mans in 1924 and following models
which repeated those successes each June 1927, 1928, 1929 and
1930.

• Purchased by Rolls-Royce in 1931 the company has been owned

by the Volkswagen Group of Germany since 1998. The business is
still based in Crewe, Cheshire, England with their Central
Production Facilities there.
 Strengths
• High R&D
• Innovation
• Loyal customers
• Market share leadership
• Strong brand equity
• Reputation management
• Unique products
 
 Weaknesses
• Diseconomies to scale
• Not diversified
• Poor supply chain
 Opportunities
• Acquisitions
• Emerging markets and expansion abroad
• Innovation
• Product and services expansion
 Threats
• Competition
• Economic slowdown
• External changes (government, politics, taxes,
etc)
• Lower cost competitors or imports
• Product substitution
 Importance Impact
Factor (0 - 10) (-5 < Impct < +5) opportunity Threats

Political 5 -1  - 5

8 +3 +24
Economic  

Social 8 +3 +24  

Legal 7 0  

Technological 8   +2  +16  

Supplier 7  -2   -14

 Bentley Mulsanne

Price in India Rs 2.9 crore

 FERRARI
• Ferrari S.p.A. is an Italian sports car
manufacturer based in Maranello, Italy.
Founded by Enzo Ferrari in 1929, as Scuderia
Ferrari, the company sponsored drivers and
manufactured race cars before moving into
production of street-legal vehicles as Ferrari
S.p.A in 1947. Throughout its history, the
company has been noted for its continued
participation in racing, especially in Formula
One, where it has had great success.
 Strengths
• Innovation
• Loyal customers
• Strong management team
• Strong financial position
• Reputation management
• Unique products
 Weaknesses
• Positioning.
 Opportunities
• Emerging markets and expansion abroad
• To Cater two Market segments.
 Threats
• Competition
• Economic slowdown
• External changes (government, politics, taxes,
etc)
• Lower cost competitors or imports
 Importance Impact
Factor (0 - 10) (-5 < Impct < +5) opportunity Threats

Political 5 -1  - 5

Economic 8 +3 +24  

Social 8 +4 +32  

Legal 7 0  

Technological 8   +3.5  +28  

Supplier 7  -2   -14

 Ferrari Four

Expected Price in India 5 Crore(ex - Mumbai)

 BUGATTI
• In 1998, Volkswagen AG decided to revive the
legendary Bugatti automobile brand,
purchasing all trademark rights, and the next
year Bugatti Automobile S.A.S. was founded in
Molsheim, Alsace, as a Volkswagen France
subsidiary.
• Bugatti was founded in Molsheim, France (Germany at
that time) as a manufacturer of high performance
automobiles by Italian-born Ettore Bugatti, an eccentric
genius.

• The original company is legendary for producing some of

the most exclusive cars in the world, as well as some of
the fastest. The original Bugatti brand failed with the
coming of World War II, like many high-end marques of
the time. The death of Ettore's son Jean was also a
contributory factor.
• The company struggled financially, and released one last
model in the 1950s, before eventually being purchased for
its airplane parts business in the 1960s.
• Today the name is owned by Volkswagen Group, who
have revived it as a builder of limited production exclusive
sports cars.
 Strengths
• Fastest Legal Road car
• Innovation
• Loyal customers
• Strong management team
• Strong brand equity
• Strong financial position
• Supply chain
• Pricing
 Weaknesses
• Diseconomies to scale
• Low market share
• No online presence
• Not diversified
• Poor supply chain
 Opportunities
• Acquisitions
• Emerging markets and expansion abroad
• Innovation
• Product and services expansion
• Can server two market segments
 Threats
• Competition
• Economic slowdown
• External changes (government, politics, taxes,
etc)
• Exchange rate fluctuations
• Lower cost competitors or imports
 Importance Impact
Factor (0 - 10) (-5 < Impct < +5) opportunity Threats

Political 5 -1  - 5

Economic 8 +3 +24  

Social 8 +3 +24  

Legal 7 0  

Technological 9   +4  +36  

Supplier 7  -2   -14

 Bugatti Veyron

The Fastest on normal roads and the costliest @ 16 Crore INR