Expensive cars have better chance to survive and grow

Rudijanto, Contributor, Jakarta

Targeting the few people at the top of the social ladder, luxury car dealers have confidence the market for their products will never disappear or be affected by any crisis that could shake the nation's still fragile economic foundation.

Even as the economy is still struggling to recover from the worst economic crisis in the nation's history, one can easily find top European cars such as BMW and Mercedes plying Jakarta's overcrowded roads.

Luxury car dealers know that the top market segment will never swell to a gigantic size. In fact, in the last three years, they believe that the luxury car market has remained stable at approximately 4,500 to 5,000 units per year.

With five players, including BMW, Daimler Chrysler and Jaguar, in this small-sized market segment, one can expect that all players carefully guard their market share while, at the same time, trying to enlarge their portion of the market cake.

While car buyers in the lower market segment tend to buy cars mainly for transportation purposes, luxury car buyers choose top brands such as BMW, Mercedes and Jaguar not just to meet their motoring needs, but also to boost their prestige.

Certainly many other auto brands in the lower market segments with far lower prices are able to meet the demand for relatively comfortable vehicles, but such vehicles can hardly reflect the status of drivers.

Daimler Chrysler's deputy director of marketing planning and communications, Yuniadi H. Hartono, believes that buyers of luxury cars need a symbol to reflect their success and lifestyle. That is why price is not the deciding factor in any purchase decision, but rather it is the strong brand image that is capable of boosting their prestige.

PT BMW Indonesia's director of corporate communications Helena Abidin rightly describes the psychology of customers in this upper segment when she says that these people love to be looked at in the cars they are driving.

Aware of this need for recognition, luxury car dealers offer extremely exclusive models to attract this market segment. The more exclusive the model and type, the better their chances of winning the heart of those at the peak of the economic pyramid.

That is why BMW has decided to boost its campaign for its BMW 5 Series and 7 Series this year. Unlike the BMW 3 Series, which has been well received by the market, the BMW 5 and 7 Series are aimed at for more socially and economically established customers.

"We consider the BMW 3 series, with a price of Rp 439 million, as an entry point to the BMW club. With the BMW 3 series already grabbing 83 percent of total BMW sales, we have decided to strengthen our 5 and 7 Series because they can bring our cars to a more prestigious and luxurious level," says Helena.

Reflecting exclusivity, the design of the new 5 Series clearly distinguishes itself from BMW's other model series. It has dual headlights equipped with white reflectors in a powerful and striking design. The car also has 16-inch alloy wheels and flowing transitions that wrap around the front of the car through the sideline to the rear.

Aside from the new 5 Series, which is sold for Rp 990 million, BMW has also introduced several new models, including the 730 Li Series and 6 Series. The 730 Li Series will be sold for Rp 1.3 billion.

While BMW aggressively launches new cars this year, Jaguar's sole distributor here, PT Prima Auto Grupindo (PAG), will not launch a new model this year. But PAG's sales manager, Fadjar Utama, says that there is already a new Jaguar car prototype for 2005.

"We are different from other luxury car manufacturers because we are more conservative in terms of design. The difference in designs between previous and existing models is not too big because our designs are classical," says Fadjar.

A look at various Jaguar models confirms Fadjar's statement that there is a continuity in design between older models and current ones. Seemingly, there is a philosophy in Jaguar's designs that enables all designs to be in harmony with previous and existing models.

"We still retain our philosophy as the car of the noble class. The design of our cars resembles royal cars of the nobility. This is shown in our interior designs that still use wood as part of the interior," said Fadjar.

The Jaguar S-Type constitutes one favorite type among Indonesian buyers. The car is the first in its class to offer ZF six-speed automatic transmission. This S-Type has a more stiffened body with increased chassis rigidity. Its front suspension is entirely new and the rear suspension has been totally revised.

Another Jaguar model that has already been introduced to the Indonesian market is the new XJ. It has an aluminum monocoque body that is longer, taller and wider than its predecessor, but up to 200 kilograms lighter. The car is powered by a 240 bhp, 3.0-liter V6 engine with other engine options including a new 3.5-liter V8, a 4.2-liter V8 and a 4.2-liter V8 supercharged.

Just like Jaguar, Dailmer Chrysler relies on its existing models such as the Mercedes Benz E, C and S classes. Yuniadi says that one of the strengths of Daimler Chrysler's cars is the Pre- Safe system that can protect passengers in the even of an accident.

"It is just like our eyes, with the eyelids closing seconds before being hit by an object, our Pre-Safe also operates when there are signs of car accident such as sudden brake application at high speed. In such a case, our censors immediately operates the safety system, including air bag, to protect passengers," says Yuniadi.

The price of Mercedes' E, C and S classes ranges from Rp 472 million to Rp 3.1 billion. Aside from sedans, Daimler Chrysler also sells jeeps such as the Grand Cherokee family, namely the Grand Cherokee Limited Automatic 4.7 L, 4.0 L and 3.7 L.

Unlike Daimler Chrysler's sedans that have been assembled in Indonesia, the Grand Cherokees are imported completely built-up. The jeeps are sold for between Rp 589 million and Rp 693 billion.

With prices of between Rp 400 million and Rp 3 billion, no doubt that only those few elite at the top of the economic pyramid are able to purchase such luxury cars. While their numbers are small, such customers have almost unlimited purchasing power.

Attracting only the wealthiest of the wealthiest, luxury car dealers can feel secure of their survival even during an economic crisis, since their market segment will be the last to be affected by any crisis.

Thousands of years ago, Chinese philosopher Sun Zi (Sun Tzu) taught "shi sheng chy gao," which means: "For a commanding view and to ensure a better chance of survival (against the enemy), occupy the high ground."

Certainly, luxury car dealers have occupied the highest ground in the Indonesian market. As long as their grasp on the market remains firm, their chances of survival and growth are well assured.