Mercedes-Benz to bring hybrids and EVs by 2020

The German luxury carmaker is ready to introduce its plug-in hybrid and electric vehicle technologies and models in India but feels the 2030 target for complete electrification is a tad too soon to be considered feasible. 

With climate change and speedy depletion of natural resources being the major issues for environmentalists and policy makers worldwide, the automotive industry is doing its bit to develop alternate sources to power the vehicles of the future.

The flag bearer of the automobile world, Mercedes-Benz plugged into electric mobility with its ‘EQ’ electric mobility brand at the 2016 Mondial de l'Automobile in Paris last September. Signifying ‘Electric Intelligence’, the new brand will focus on comprehensive electric technologies and drive innovations to cater to futuristic mobility solutions. India being an important market and an inclusive part for its future growth trajectory, the company says it is in analysis mode and observing the developing trends in India's car market.

Speaking to Autocar Professional, Michael Jopp, vice-president (Sales & Marketing), Mercedes-Benz India, shed light on the company’s future plans for alternately powered luxury cars for the country. “At Mercedes-Benz, we already have the widest offering of plug-in hybrids among all luxury manufacturers globally. So, we are currently observing the market in India and based on that, we will decide, if and when, to launch some of these plug-in models here.”

“Obviously, we have also announced to have a range of full EVs available globally by the end of 2020. So, we are completely ready and are in an observation mode for that as well,” he added.

The company, however, is sceptical of the government’s vision of bringing about a complete transformation and witnessing sales of only EVs by the year 2030, which is a little more than a decade away.

According to Jopp, “The target of the Indian government to venture out fully into EVs by 2030 is extremely ambitious, considering what all needs to change, and having a short period of time on hand to reach there. So, we do have some question marks whether that is feasible. However, from a transition perspective, we will be ready with plug-in hybrids and electric vehicles and have a broad portfolio of EVs in the Mercedes-Benz stable.”

“The India-specific concerns, which include infrastructure, availability of electric power and clean sources of electric power, are the major challenges lying up ahead, and once streamlined, they would then open the floodgates for luxury car manufacturers to offer their EVs here. I think roughly 25 percent of luxury cars could move to being electric by 2025,” said Jopp.

BULLISH ON PERFORMANCE SEGMENT

Mercedes-Benz is currently celebrating 50 years of one of its most prized possessions, and the most iconic names in the vehicle tuning space in the world – AMG. The performance brand, which started out of a garage in 1967 by former Mercedes-Benz engineers, Melcher and Aufrecht, in Affalterbach, Germany, became a fully integrated entity of the Daimler Group, as it acquired 51 percent stake into the brand in 1999, and clubbed it to be its integral part, rechristening it as Mercedes-AMG. The AMG division, which was at a mere 8,000 global units in 1999, now stands tall with sales of over 100,000 units in 2016, showcasing the significant potential for the performance brand.  

 
Marking the 50th anniversary of AMG, Mercedes-Benz India on July 21, launched the GLC 43 AMG Coupé at an all-India price-tag of Rs 74,80,000 ex-showroom. The crossover gets a coupé-styled derrière, with a rapidly sloping roof towards the rear, giving it an element of individuality over the regular GLC.

With the new offering, the company has now expanded its AMG portfolio in India to 10 cars. Mercedes-Benz views the business from this performance segment to only be growing in the coming years.

According to Michael Jopp, "The performance car market in India is rather nascent and is currently pegged at 400-500 units annually. We hold a significant 50 percent share of that pie. The Indian luxury car market itself accounts for only around 1-2 percent of the total car business. There is a lot of unexplored potential and this market and the performance segment within it is set to grow."

The AMG range is aiding the company's operations in a two-fold manner. While the halo image it brings to the luxury marque is a given, there is increased profitability and business sustainability for both the company and its dealer partners.

MORE AMG PERFORMANCE CENTRES

Roland Folger, MD and CEO, Mercedes-Benz India, is upbeat about the heightened consumer interest in the performance brand in a relatively short span of 5-6 years, when Mercedes-Benz got serious about AMG cars in India.

Folger said, “One needs to understand that most of our key customers are usually internationally travelled, so they already are aware of our longstanding collaboration with AMG. And they got intrigued about the brand when they saw it here. “

“Seeing sales consistently gain momentum, two years ago we decided to come up with AMG Performance Centres (APCs). The concept was first executed four years ago in Germany and later on introduced around the globe. But this needs to have a certain minimum volume, with a certain shop-to-shop concept, with minimum of 2,500 square feet of space and well-trained dealer staff. Although it is certainly not inexpensive to run such a store, gauging good business coming up from these centres, we are now expanding the number of these outlets to seven with two new ones in Chennai and Kochi this year,” he added.

The AMG line-up is also helping the brand to be more youthful, with the average customer being 7-8 years younger than those opting for regular cars and comprising mostly business and working professionals.

INCLUSIVE SERVICE PACKAGES DO WELL

While a luxury car does come with a high sticker price, the company has put in diligent effort to ensure customers are not impacted by the dynamic nature of the upcoming maintenance expenses, by bringing in its ‘Star Ease Maintenance Packages’.

According to Folger, “We wanted to bring tangible benefits for our customers and fixate that servicing cost, which naturally influences the total cost of ownership of any vehicle. If we talk about the E-Class, our packages are up to 80 percent cheaper than the competition. The positive side now is that from a 20-25 percent penetration of such inclusive options in the market, we are now trending at close to 50 percent, thus doubling the level of such additional options. It is a win-win for both customers, as well as our dealer partners.”

GUNNING FOR DOUBLE-DIGIT GROWTH IN FY2018

With the dust around GST expected to settle down soon, Folger is rather bullish about the company's performance and seems confident of a dominating fiscal.

“On the back of highly attractive vehicles in our portfolio, including the new E-Class, we have closed the first half of 2017 with 7,171 units (+8.7%) and we are hopeful of finishing with double-digit growth this year. Although the dust hasn't yet settled over the GST, with states like Maharashtra offsetting the positive impact by bringing in a 2 percent road tax hike, it will still be a good catalyst to the sales of premium cars, once customers of luxury cars understand the overall impact of the new tax on their businesses and return into a buying mood and start spending. Hopefully, with no upcoming surprises down the line, we expect good growth in FY18," said Folger.

On a summation note, Folger believes that the general sentiment and emotional appeal around GST is good and from a mid-to long-term perspective, it is definitely going to bring a positive impact on the automotive industry. 

(This article was first published in the August 1, 2017 print edition of Autocar Professional)