A Brave New World: BMW Fights For It’s Share of the Hatchback Market in Asia

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You’d have to be a fool not to notice that the world has definitely changed. Since the start of the economic and financial crisis in late 2007, it's has changed to a core. Nowadays the Chinese and Indian markets are the biggest source of growth in the world, for any kind of merchandise, and especially for cars. (Once mighty) Giants like the US and Europe have recently been defeated in numbers, giving the Asian countries a lot more attention and a total change of attitude.
However, given the fact that these countries also have the biggest population on Earth (combined they sum up to almost 40% of the total population) you really have to adapt. In India for example the real challenge for BMW and other top manufacturers will be to seize the hatchback market.

BMW has it’s 1-Series and Mercedes-Benz also has the recently introduced A-Class, and these giants will go head to head. Audi will surely join in this battle, with a smaller sized A3, specially developed for these markets. It is important for manufacturers to keep on their toes and to satisfy exactly what the customers and the market demands.

In this case, for example, the markets demand smaller cars because of space restrictions (like parking spaces and actual roads) but not so small that you cannot take your family with you.Cultural differences are very important for Indians. Usually the families are pretty big, and they have at least 1 child, so space is important.

But why the 1 Series? Why BMW and why Mercedes, when you can always get a VW Polo or a Vento or even a Jetta at a cheaper price. Well the Indian middle class is expanding, fast. This means that they will want some luxury in their lives, and that luxury can come through a lot of different ways, but a car is the most popular option. So for this rapidly rising middle class, the car manufacturers have to be able to provide a solution that will bring them the biggest profit.

Also, mature markets will be growing at a slower pace and that’s why “emerging markets, like China, India, Brazil and Russia are very important” says Philipp von Sahr, BMW’s president for India. Following this premise, it is expected that BMW will release the 1 Series hatchback this year in India to compete with it’s long time rival, Mercedes-Benz.

Some people though, argue that small hatchbacks will be a drawback in these markets and that the expected results will be different from the actual events. According to Ashvin Chotai, managing director of Intelligence Automotive Asia in London, “hatchbacks are unproven in the premium segment” and “the people will prefer to buy a larger and more luxurious model”.

However, keeping in mind that India considers it’s middle class to be everyone that has an annual income from $3,700 to $18,500, the market could very well go for the premium hatchbacks because of the big difference in income. Also, India has a well known affinity for the small cars which started in the 1980’s when the Maruti 800 hatchback was released and was a very popular model (helped by the tax breaks for Maruti owners). Recent numbers show that as well - just last year the Indian market only sold around 1.6 million hatchbacks (that’s more than any other country).

Another factor that might tilt the balance in favor of the hatchbacks might be the rising gas prices. Hatchbacks are known for having really good fuel efficiency and this might count the most.

BMW has to adapt it’s offer for these markets in order to relapse after the failing sales in Europe and the US. This year, premium car sales, such as BMW’s have been dropping again, ending at the lowest numbers in the last 19 years in Europe. This could spell a lot of trouble for the premium car maker, and only biting a big chunk of a rising market (such as India, China or Brazil) will help it recover.
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