It is nice to be number one, but not at any cost: Mercedes-Benz India CEO

Martin Schwenk talks to Business Standard about the struggle to grow the luxury car market, its increased sales through digital marketing, and how the company aims to tap product niches

Martin Schwenk, the newly appointed chief executive officer (CEO) at Mercedes-Benz, talks to Pavan Lall about the struggle to grow the luxury car market, its increased sales through digital marketing, and how the company aims to tap product niches

How is this market, which is one of the small ones in comparison to the size of its economy, going to develop and get larger?

In the past 10 years it has grown five times from 8,000 to 40,000. In the next 10 years, which is not as long as you think, increasing five times to 200,000 is not fantasy at all. 

What are you doing to get drivers and buyers of premium cars that are a segment below your starting level of cars into them?

We don’t think that’s a very large segment to start with, the premium segment that is. If you consider a 10 per cent price jump on to a car in that range, which is between, say, Rs 15 lakh and Rs 20 lakh, it’s still quite a way off from the starting price in our range, which is the A Class at Rs 32 lakh ex- showroom. Large volumes which we don't have can reduce prices

Your V Class, a luxury van, seems to have generated strong sales for a niche but what made you bring down such an unusual choice for a new product? 

The idea was to create a segment where there is nobody, and between the Innova and this vehicle there is basically nothing. There is a need for transportation for people and this product worked.

Your biggest challenge at hand?

It remains the prohibitive tax structure and yet being able to find a product that will work in this market, keeping its price in mind. The duties are not helping. So making profits in a market with small volumes, GST, and high duties is something that is not easy. 

Your competition BMW enters a new product phase and has a dozen new laun­ches, many of which are brand new vehi­cles come to mark this year. Will we see the start of discount wars?

It’s nice to be number one but not at any cost.  I am very clear and the thing with discou­nting is that it can be done for a short time but more as it hurts the brand overall. 

How many products do you have for this year, and will there be any all electric ones?

We have around 10 products with half refreshed variants and around half brand new ones. No all electric ones for now and, believe it or not, neither dealers nor custo­mers seem to be asking for it as of now 

Your range of AMG sports cars, which start in price above the E Class, reports strong sales. Tell us more. 

We don't share exact numbers but, yes, their sales are in hundreds and we have 50 per cent of the market share in that seg­ment. Seen another way, demand is good enough for us to have six AMG service centres we have opened recently. 

There’s an argument that our infrast­ructure doesn’t support luxury cars.

Every major city is working on highway networks, roads as well as public transport systems, especially metro systems, which is clever to focus on so as to make mobility accessible for everyone. That would make it easier for luxury carmakers to do business.

How has digital changed the game? 

The digital push has begun. We sold 2,500 cars of our 15,500 cars in 2018 based on leads from Facebook, Twitter, and so on. New initi­atives will help to adopt more scientific and data-driven decision-mak­ing processes and offer more personalisation for our customers.