Luxury-Car Competition Intensifies in India

India is the latest stage in the competition between three German auto giants: BMW AG Audi AG and Mercedes-Benz. The luxury car makers are introducing new models and offering customized interest rates in a bid to lure buyers. They are also opening new showrooms in the country’s smaller cities.

Globally, the race is neck-and-neck between BMW AG, which has the largest market share, and Volkswagen AG’s Audi. In third place is Daimler AG’s Mercedes-Benz.

This pattern is mirrored in their performance in India, where sales for BMW have been unchanged from last year at 7,389 cars from January to October. Audi India sold a similar number of vehicles in this period: 7,267, a 55% increase from the same period a year earlier. Mercedes-Benz India Pvt., saw sales drop 10% between April and October to 3,651 cars, according to data issued by the Society of Indian Automobile Manufacturers. The company declined to share figures from January.

Mercedes-Benz, which started its operations in India in 1990s, over the last decade lost its dominance in the market to Audi and BMW. Now, the company is trying to up its game by launching new models. In September, it launched the B-Class hatchback, which, with a base price of 2.15 million rupees ($39,815) is the company’s lowest-priced vehicle in India. The company has already sold out this year’s lot of 250 units.

Last week, BMW said it would debut the 1-Series in mid-2013, a hatchback that is expected to compete with Mercedes’ B-Class. The company also said it would introduce a new version of its 7-Series sedan. Both cars will be assembled at the company’s plant near the southern Indian city of Chennai. Vehicles assembled in India are cheaper for consumers, since they are taxed less.

Last month, Mercedes also began assembling its first sport utility vehicle in India: the M-Class. Audi also began assembling an SUV, the Q7, in November, its second made-in-India SUV after the Q5 model. BMW, which already assembles the X1 and X3 SUVs in India, introduced a new version of the X6 crossover vehicle last week.