Mercedes India CEO on why luxury space is yet to take off in the country

Schwenk talks to Pavan Lall about learning from foreign markets, issues that hold back luxury products sales in India and the route Mercedes takes to integrate with local systems and processes

It was not a challenge but it did feel somewhat like a test when Martin Schwenk, managing director and CEO at Mercedes-Benz India, agreed to meet me at The Leela near the Mumbai airport at 8 am. That meant one had to set the alarm for 6 am. Cometh the time of our meeting and Schwenk, a lean German in his early-50s, is wide awake and bang on time, dressed in a half-sleeved Polo shirt with the AMG logo and khaki chinos. “This wasn’t too early for you, was it?” he asks with a broad grin. “Not at all,” I lie.

We find a quiet table at the bar of the bustling restaurant before ordering coffee — an Americano with milk for me and a cappuccino for Schwenk. Breakfast at The Leela, like any other five star hotel in the city, is offered buffet-style across multiple counters with a variety of options that range from Indian to continental fare. We disperse to serve ourselves and return in a few minutes. 

After ordering a mushroom omelette, I join my guest at our table, with cereal doused with almonds and raisins, plus baked beans and bacon. Schwenk has come back with a plate of sautéed vegetables that include zucchini, carrots and a bowl of what appears to be clear vegetable broth. “Soup is great in the morning, something I got used to when I was living in China,” he explains. Before he came to India a year ago he was CFO for Mercedes-Benz's joint venture in Beijing where he was stationed for three years.  

Born in Esslingen am Neckar, in Germany’s Stuttgart Region, Schwenk, whose parents were teachers says the home environment was “very liberal, but still value-driven”, which means he was never pushed to doing anything he didn’t feel comfortable with. 

The eldest of three brothers, he went straight into military service after high school. He found himself enlisted with the German armed forces or the Bundeswehr. While there, he specialised in setting up telecom operations for troops on the move. “Remember this was 1984 and we had retrograde technology from the 1970s in use, so we would move around in huge trucks and set up telecom networks that a cellphone can probably overpower today.” My omelette has arrived and as I tuck in I say, “Sounds like fun. Did you enjoy it?” Schwenk’s answer is, “I hated it. The way people imposed their will over what I thought was an undemocratic structure — which could be no other way in the army — was a shock to my system but I learned a lot about people.” To a youngster's mind, just because someone had more stripes on his shoulder didn’t mean they always knew better, or so he thought. 

Once he was through with the military, Schwenk chose to become a mechanical engineer, enrolling at the Stuttgart University. Thereafter before he joined Mercedes as a quality engineer at its international trainee programme. It was 1993 and a few months into the job when he was deputed to Argentina. He got on a business-class flight, which impressed him no end at the time, and headed for Buenos Aires. His mission there as a young engineer was to optimise production at Daimler’s truck plant. Of course he did more than that. Between learning about commercial vehicles and acquiring a taste for grass-fed Argentine beef grilled on a parilla, he met a young economist from Germany whom he later married.

When he returned to Germany he continued as quality engineer, and then executive assistant and manager, finance and controlling, until 2005. He moved to South Africa in 2006, as divisional manager of finance and controlling. Four years later, he wound up and moved again to Austria as CFO for Mercedes-Benz G GmbH in Graz for a short stint. In 2010, he moved to Mercedes-Benz in the USA as CFO. In 2015, Schwenk shifted to Beijing with his family as CFO for Beijing Mercedes-Benz Sales Service Co, a joint venture between Daimler and Chinese partner BAIC, before finally landing in Pune in November 2018. 

Was there an overarching takeaway from his travels? Too many to recall, Schwenk says but the one that has stayed with him came from China where he lived for three years. At a management workshop the head of the trade union there was addressing the team. There were interpreters and the conversation veered to work-life balance. He asked what that meant. “In the trade union leader’s view there was no such thing because it meant that you had no life when you were working or that your life only started when you got back home from office at 8 pm. Work was life and life was work and they had to be one and the same. It might be infused with a lot of Confucius but it got me thinking,” Schwenk says. “With that approach the very concept of work-life balance is flawed.”

Mercedes-Benz in India is in a good place at the moment. It retained its number 1 position for the fifth straight year for 2019. “We grew our business even in a tough year. But as a manager I would have liked it if we were trailing at number four because of the challenge.” Is it of any significance that Schwenk today is the only expat German CEO running an auto brand while BMW, Audi, Jaguar Land Rover and even the Volkswagen Group have all hired Indian country heads? Schwenk says that his company sees itself as a unit integrated into the Indian system of business. Then, as if to reinforce his point, he asks me how many German employees does Mercedes-Benz India have? “Three,” he offers the answer himself.

We are done with our coffees and breakfast. Volumes for India’s luxury auto market are a fraction of what they are in larger markets like China. “It would be in our interest to have some sort of free trade agreement that allows lower duties and that has been communicated to our embassies but the bigger issue is the taxation structure which includes both GST and the road tax that pushes prices very high,” Schwenk says, adding that the other big difference between China and India boils down to the issue of embracing consumerism. “The Chinese are ‘consumers’ while Indians are not fully subscribed to the idea of spending on themselves and that they have one life to do it in. But you do see some changes creeping in among younger audiences and that will eventually drive the economy and the luxury business."

So which one is Schwenk’s favorite Mercedes car? His answer is the R107, referring to the sports cars that were made by Mercedes-Benz from 1971 through 1989. “It was a dream car when I was young, and still is... even today.”