Mercedes-Benz India's managing director and CEO, Martin Schwenk, who has completed a year in the country, speaks on the benefits of a product-led and customer-focused growth strategy, how the recent 'Wishbox' financial programme is paying dividends, why the company is participating at Auto Expo 2020 in Delhi when most leading OEMs are not, and on bringing a halo electric car to India
Mercedes-Benz India, despite the ongoing industry downturn, has been rather aggressive in terms of new product launches. And Q4 (October-December 2019) should see more. How confident are you about growth prospects in the luxury car segment?
It is a difficult period for the entire luxury segment. In Q3 CY2019, we did substantially better than others in the luxury segment (between January-September 2019, total sales were 9,915 units, down 16 percent YoY). So I'm not hundred percent certain about the overall momentum. In end-August and September, we saw a pick up both in showroom footfalls and also sales.
We have sold 29 percent more in September, over August 2019. Growth in
Q3 over the previous quarter is 25 percent, and that is quite a bit more than normal seasonality. For example, in 2018, Q2 to Q3 was just 5-6 percent growth; now we have 25 percent. Finally, we have actually quite a positive view at the moment. Not very bullish, but I think we are seeing
the recovery mode and I'm confident there is a chance that in Q4 we will achieve last year's level. It all depends on the next three to four weeks and what the month does. But overall the trend has been quite positive.
Recently launched 'Wishbox' customised financial solutions programme has resulted in over 500 bookings
While obviously governmental policymaking is helping, our recently introduced Wishbox initiative has been quite successful and has provided over 500 bookings (Wishbox is a compilation of customised financial solutions with five primary features — Key-to-Key Change, 25-25-25-25, zero down payment, Star Agility+, and comprehensive insurance). This is quite a substantial number if you roll out a program like that. We have seen a lot of interest in the different models we offer with the zero down-payment scheme.
Going forward, what would be your focus areas and growth strategy?
We will roll out a number of products in the next 12 months. I cannot disclose what they will be but we will definitely have a big product offensive because even today we have the most variants with 25 different models. We will have some refreshes in the portfolio and some additions too.
Then there are connected services, digitisation and network development also in Tier 2 and Tier 3 cities. It's continuous development in these fields.
Mercedes-Benz India has around 94 dealerships at present. When will the milestone 100th dealership come up? Will it be this year?
We have opened almost nine dealerships in the last few months and will continue opening more. Whether it will be the 100th or not, it all depends on timing and rollout but we will certainly add a few more. If it happens this year or not, depends on a lot of things like construction schedules and launch schedules.
At present Mercedes-Benz India has the largest network among luxury carmakers with around 94 dealerships in the country
I'm not saying that it looks difficult because we have lined up growth over the next couple of months. It will happen somewhere in the future and we will continue expanding the network.
It is nearly a year since you took charge of Mercedes-Benz in India. What has been your experience thus far and what are your key learnings?
India is a very diverse country and what I have learnt is that the markets are very different, be it Mumbai, Delhi, South India or Tier 2 and Tier 3 towns. They all have very different customers and expectations are different, so there is a lot to learn about that. But at the same time, I have learnt and understood a lot about how regulations work and what the requirements for the market are. We also try also to implement what we learn; for instance, we recently launched our digital world initiative. We know Indians are tech-savvy and that is one of the clear topics we focused on this year, and actually prioritised it even higher than connected or the e-commerce space. Also, with the e-commerce platform that we have launched, we will further develop our reach.
On the regulatory front, while we have limited ways to influence policymaking, we need to be agile and capable of dealing with change so that we are capable of dealing with the outcome. I would, though, wish for a little more visibility and stability in terms of policymaking. For instance, if we had a little more clarity on the shift to BS-VI conversion, like two or three years to adjust, then one can make a plan. But if you have a discussion today that we need to do it tomorrow or there will be a change in taxation, it doesn't happen. Having some visibility on the upcoming change will certainly help.
You have an R&D setup in India, which is known for its frugal innovation, low-cost engineering. Can you detail some recent key India R&D-led developments for your global markets?
We usually defer this conversation to the head of that division — Manu Saale, MD and CEO, Mercedes-Benz Research and Development India — but there is a lot that is happening from engine to software development, directly going into engine optimisation and adjustments. It's a whole range of body construction and more. We have around 7,000 people working there and there's a lot of influence and input into any and every product. For us, it's also quite helpful how MBRDI is supporting the development process and we have a lot of opportunities to quickly check on various things and also technical support if needed.
Mercedes-Benz India is one of the prime participants at Auto Expo 2020 in Delhi, which many automakers are skipping. What are you expecting out of this biennial showcase?
This year we celebrate 25 years of Mercedes-Benz in India. We are here for the long run and I think it is necessary for a brand to present with not only current products and create a platform so that existing and potential customers can connect with the products but also with the brand. It is very important that the Indian market also sees that we are present and that we believe in our long-term future here. We want to be approachable and accessible to everyone.
I want to invite people to visit us at the Auto Expo and see the cars that you don't see in the showroom. There will be a lot of engagement. For me, it means projecting products and the future of our products and services and also brand building.
In May 2019, the company launched the BS-VI Long Wheelbase E-Class, which has been a volume driver. Overall sales for the luxury brand in the year to date crossed the 10,000-unit mark in early October.
From my own experience, if you're a 15-year-old and you see the cars you will already connect with them. I can promise that if one comes and sees the cars what we offer, it will sow a seed in your mind and heart. And, this seed will help us in the long run. That has also been our thinking since the past 25 years (in India) and will continue for the next 25 years and more.
So if there is a slowdown at the moment, I don't think that should be a sign of winding down an initiative like that. Obviously, participating in auto shows is an expensive affair and you don't get the return immediately; in fact, it takes many years to get that back. But in the end, it is all about an overall experience we want to offer — showcasing cars, connecting with the brand, presenting our services and also being approachable to everyone who is interested and connecting with them.
Some OEMs are bringing electric cars to India more as a halo product to showcase their technologies, as volumes are not yet justified. Are you planning a move like that?
We are definitely reviewing that and I can see something happening in the course of next year. It's just that we did not prioritise it this year. Also, from a market condition, it would not have made so much sense to have a halo product and nothing coming afterwards. I am confident that we will move in that direction next year but I cannot really commit anything right now. But I'm confident we will have something next year.
What has been your most unique experience in India till now?
The most interesting experience is how easy it has been for me to connect to people here. I have had so many positive experiences around our brand, and most people love Mercedes-Benz. I know our brand is respected all over the world, but I can truly say it is loved here. When I travel on a flight and converse with a fellow passenger, the love for brand Mercedes-Benz is huge and that makes me proud.
(This interview was first featured in the November 15, 2019 issue of Autocar Professional)