At present, India doesn’t stand anywhere close to China in the global pecking order for luxury vehicles. Yet, Mercedes Benz has deputed one of its top leaders in the giant northern neighbour, Martin Schwenk, to head up the operations at India’s biggest luxury carmaker. Despite the rising number of dollar millionaires and billionaires in India, the luxury-vehicles market continues to remain highly under-penetrated, at just 1.5% of the overall sales, against 13% in China and 10% in the US. Mercedes Benz India's new MD Schwenk in his first interview with Ketan Thakkar said that while there is a huge difference in the market size between the two neighbours, the ‘can-do’ attitude and growth’ mentality and aspiration for luxury are common growth factors. Edited excerpts:
How do you look back at 2018?
We sold 15,538 cars, which is 1.4% more than 2017, so not a huge increase but we are still on track in our growth story. Overall, the first half was very strong… but then in the third quarter, we felt headwinds…We are satisfied with the result.
The way forward…
We have closed 2018 strongly and we believe the momentum is there for us to be optimistic. We see that things have not massively changed or deteriorated any further. There is stability in exchange rates, fuel prices….The outlook is cautiously optimistic.
Mercedes has grown slower than the rivals. Do you expect to expand faster in 2019?
I am confident we can grow faster. We have driven market development and I will want to build that legacy. Now, we are going into the 25th year for Mercedes-Benz in India in 2019, and we will put in efforts to make that a successful year. We have a few things lined up — new products like V Class, GLE and we are adding new cities that will bring growth. We will have 10-12 new product actions during the year. We will push our AMG portfolio. We expect a positive feedback after elections…and I am confident it can unleash some market potential in the second half of the year.
Will your stint in China help?
Both markets and frameworks are very different and cannot be compared. Both the countries are rapidly developing and the people have ‘can-do’ attitude and ‘growth’ mentality. We see some of the trends in China, for instance, of customers aspiring to upgrade to luxury, in India as well.
Your views on the future of diesel, electric and hybrids…
For us, all the technologies will co-exist . The internal combustion engine (BS-VI), PHEV (plug-in hybrid electric vehicles) and EV will all exist together. We are making our diesel portfolio BS-VI compliant. We also have the EQ brand in our global portfolio, which defines future mobility. In India, for the industry to mature, we suggest a staggered approach that is needed to establish EVs in the initial years.
On the full-year discounting trends in the luxury car market…
Discounting is a short-term activity. If you do it over an extended period, you damage the brand and the market. We cater to luxury buyers and we need to avoid the perception that our cars don’t have the value. It’s not fair to the customers who have got the cars previously. It’s not fair to the dealers and investors because they don’t make the profits. It’s not good for the OEM because we cannot make any money.