Luxury beyond cars: Mercedes-Benz revamps showroom experience

This is no surprise. The German luxury carmaker derives a significant chunk of its revenue and a quarter of its sales volumes from its most expensive cars, all with a price tag in upwards of ₹1 crore.

Customers can expect key handover machines imported from Stuttgart, and showrooms transformed into exclusive boutique outlets with extra space for displaying the company's merchandise, which earned it ₹60 crore in revenue last year, 20% higher than in the year prior.

"We are transforming our showrooms to more luxury boutique outlets because of our focus on customer experience. We have private consulting areas in the showrooms, because customers prefer that over being in a space with other customers at the same time", Santosh Iyer, managing director and CEO, Mercedes-Benz India, told Mint, emphasizing the company's global strategy - one that echoes in India too - to capture more customers at the top of the pyramid.

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"Globally, this is our philosophy - our diamond should bulge at the top and be sharper at the bottom," Iyer said.

While German luxury rivals BMW and Audi are expanding their offerings to attract core as well as entry-segment luxury buyers, Mercedes-Benz says its products in the segments, accounting for just 15% of its sales, are pricier than the competition because of the features they offer. "It becomes a question of affordability in that segment then", Iyer said, adding, "We are in fact quietly adding more features to our entry-level cars, which makes them pricier. We don't want to de-content our cars".

"Taking delivery of their car is the highest point in a customer's life. They come with family and friends and the entire delivery experience we are curating, along with our German key station, these are wow moments that we want to create," Iyer said.

Mercedes-Benz's 33 franchise partners will invest in these upgrades across the carmaker's entire network of 130 retail outlets by the end of next year.

Beyond the physical spaces, Mercedes-Benz is also expanding its merchandise offerings to create a more immersive luxury experience. “We are diversifying in terms of product range, so from perfumes to dash cams to many other offerings, we are expanding our range. On the other side, we are also diversifying on brands. Along with Mercedes accessories, we now have Maybach, AMG, and the G-Series accessories," Iyer said.

The Stuttgart-based luxury carmaker derives 80% of its entire sales volume from its top tier-1 and tier-2 markets. While 48% of India's total car sales come from 500 cities classified as tier-II and tier-III cities, the share of luxury sales in these markets is only 0.4%, compared to over 2% in the tier-1 metros.

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Mercedes-Benz is also expanding its service footprint to regions where it doesn't have a sales infrastructure, but has significant or a growing customer base. The company plans to establish service infrastructure in markets like Karnal, Jalandhar, Ludhiana, Mangalore, Coimbatore, Surat, and Indore.

"There are a lot of pockets of wealth (in smaller cities). There's also a lot of cars being bought. So we want to have a presence there and not have customers travel over 2 hours to service their cars," Iyer said.

Despite the challenging market conditions in the first half of the year, Mercedes-Benz is optimistic about the second half. "For us, the June quarter has historically been weak because of seasonal factors, this year has mirrored that. The elections contributed to this weakness. But when I look at order intake or inquiries now, there is no reason to believe that the next half of the year should be slow. We continue with our focus on double-digit growth," he said.

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