Average age of Indian customer is reducing: Mercedes-Benz India CEO4 min read . Updated: 30 May 2019, 12:23 PM IST
- We have planned for launching 10 products in CY19, says Martin Schwenk, MD & CEO
- Mercedes-Benz the largest luxury car brand in India
Mercedes-Benz, the largest luxury car brand in India, completes 25 years in the domestic market . Martin Schwenk, MD & CEO, talks to Mint about the carmakers future plans for the Indian market. Edited excerpts
How do you sum up Mercedes-Benz’s journey in India over the past 25 years?
In terms of sales, we have the highest numbers. I’d like to think that we also have the most competent, experienced team. We are well established not only in terms of technologies in the plant but also in terms of the people and the processes as we have grown with our dealers for over 25 years to very mature capabilities. That is definitely the base that we now consider to further work upon. We have mostly grown all the time. However, it was always the mid-term and long-term perspective that the company had for India. I would not want to hide that probably the expectation of growth from this market earlier was bigger. That’s also the reason why our production (assembly) capacity is higher than the cars we have built (assembled). Given that the passenger car market has grown by less than 3% in FY19, the luxury car market within that has largely remained stagnant. Within the luxury car segment, we have kept the biggest market share, which is close to 40%.
How has the brand evolved in India during this time?
When I joined Mercedes-Benz in India, I was told that the brand, for a long time, resonated with the customers in the higher age bracket. I have had a lot of feedback from our customers, dealers and others who appreciate the way the brand has reshaped over time.
This obviously has a lot to do with the modern cars and their design language.
The growth story is based on elements such as local assembly, diversifying the portfolio and rejuvenating the design features and functionalities. We have learnt this lesson and it remains with us as we continue to look into expanding our portfolio, make cars available that the market may absorb.
Was the AMG brand a critical part of aligning Mercedes-Benz with the young customers?
Definitely! We have pushed the AMGs for their sportiness. It has quite a solid following among the young customers. Then the G-Class and other models are important, as they all are the brand shapers. I have had the opportunity to meet the customers and they say that the cars are beautiful, fast and they stand out. These inputs have helped us develop the brand, make it more diverse and take it away from that uncle image that it had in India once upon a time.
What is the average age of your customers in India?
The average age is late 30s and it is gradually reducing. Today, Mercedes-Benz has the largest portfolio of luxury cars in India.
How does the top management at Daimler AG view the India market?
Before I came here, I went to Stuttgart and met about 20 senior officials, who are stakeholders at Daimler. I found a huge interest in India as a market and they knew well about the sub-continent. There is a strong belief in the further development of the country, that we will see growth and should position ourselves to continue growing the market.
Having said that, I must mention that there is no expectation of growing exponentially here. India is one market where we do not earn a lot of money and the dealers don’t earn a lot too. Only the taxman earns a lot of money. So our pricing possibilities and the growth
of the market is limited under the given framework. I firmly believe that GST and cess structures are not conducive for developing the luxury car market.
You served the brand as CFO in China. How are you looking at driving profitability of the Indian operations under given limitations?
One of my focus areas is to make sure the Indian operations are profitable. We can only be successful if both the elements; the dealers and the company are viable and profitable.
The macro environment is not so conducive. Many dealers are facing financial issues across brands. We have to make sure that we have a profitable proposition for the dealers as well. As a finance person, this is definitely one of the core elements of my strategy.
How soon will the company make its entire portfolio to BSVI emission norms compliant?
I think it was a good decision by the government to embrace BSVI emission norms for the entire industry. Although it puts a lot of pressure, the benefits in terms reducing all pollutants will be substantial. We had already launched the S-Class and the C-Class cars with BSVI engines. We have now equipped the E-Class cars, our highest selling series, with BSVI technology. There are over 41,000 E-Class cars on Indian roads today. We will convert all the remaining models much ahead of the BSVI deadline.
What is the product roll out plan for the current year?
We have planned for launching 10 products in CY19. Of these we have already launched India’s first luxury multi purpose vehicle V-Class, the AMG C 43 model and the BSVI compliant E-Class cars. All these launches follow respective product lifecycles.