Mercedes India headed for a split year of sorts amid macro headwinds: CEO

Martin Schwenk. Photo by Subrata Majumdar
After posting 1.4 per cent volume growth last year, luxury carmaker Mercedes-Benz remains cautious in its sales target this year, owing to the general elections and macro-economic headwinds. In an interview with Avishek Rakshit, company’s Managing Director and Chief Executive Officer, India operations, Martin Schwenk, said their focus would be on services and bringing in new cars this year. Edited excerpts:

Last year, you had posted muted growth while other luxury carmakers had clocked good growth. What were the reasons?

In the past five years, we had around 50 per cent growth. Last year, we started on a very strong note in the first four-five months and then macro-economic situation got a bit more difficult. There was a lending crisis. Our classical customer base, comprising builders and entrepreneurs, were also affected and we had a shaky stock market in the third quarter. There was volatility. It caused a lot of hesitation in the market and so we saw some headwinds at that time. During Diwali, we were not the only ones who could not outperform the previous year’s sales. Overall, we are satisfied with what we had achieved at the end; we kept our market position. We did not gain a lot but the market as a whole also didn’t grow. 

How do you see sales this year considering the fact that general elections are near?

We assume that we are headed for little bit of a split year — maybe leaned more on stability rather than growth oriented in the first half of the year and hope for an uptick in the second half. There is a bit of wait-and-see attitude when I am talking to my dealers as well as my customers. So, we would predict a lower first half and a higher second half. 

So this year again growth will be muted?

We are cautiously optimistic to see some growth but I do not expect rapid growth. We will focus on customer service activities. New car sales are of course important but it is also equally important for us to have good customer relations. That is what triggers their next purchase.

We are reinforcing our footprint with smaller outlets in tier-II, -III cities. For example, we have a concept called service on trucks, which dealers can avail for two weeks and drive it around in their respective areas to provide service at the customers’ doorsteps.

To what extent have you decided on facelifts and bringing new models to India?

We will bring around 10 new models this year. Our global portfolio is huge. So, it is relatively easy for us to tap into a market. 

You have also been focusing on pre-owned used cars. How is it faring for you?

We see double-digit growth every year in this segment. The sales numbers, in terms of volume, are substantially low in India than other matured markets. There is also a lot of potential here. The (dealership) network, in its growth phase, had focused on new cars and we now see more and more dealers taking up used car dealerships. 

What is the level of localisation that you are doing? Do you intend to increase it?

It is around 60 per cent for all nine models we are producing. I think the set-up that we have is viable and will deepen localisation. You need certain changes in parameters. I will not say there is a strategy to further localise the existing models.

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