Mercedes is set to be the first luxury car maker in India to enter the leasing market by the end of year 2011. The company, being the largest dealer of pre-owned Mercedes vehicles in the world, plans to start by leasing out Mercedes cars to companies and corporations. Cars would be offered directly to individuals after the venture catches pace and attains a significant size. According to Mr. Peter Honegg, Managing Director and Chief Executive Officer, Mercedes Benz India consumers do not consider leasing and instead prefer to own vehicles.
The business model proposed to be followed is that the cars would be purchased by dealers who would then lease the vehicles to corporate houses. After the lease period, the car would be returned to the dealer and would be sold in the “pre-owned” market under the ‘Proven Exclusivity’ programme by the company. According to Mr. Honegg, the business venture would enable circulation of newer cars in the “pre-owned” segment, ranging from three to four years old which would further attract customers at a lower entry level into the brand.
Currently, Maruti Suzuki India Ltd (MSIL) is already engaged in leasing out vehicles to Public Sector Undertakings (PSUs). The concept is gradually gaining acceptance among companies and as of now, 25,000 cars are leased out in India annually.
