Despite the challenges posed by coronavirus (Covid-19), Mercedes-Benz said that it will go ahead with its plan of 10 launches. Martin Schwenk, Managing Director, and CEO, Mercedes-Benz India told Business Standard that the company has strengthened its online offerings to overcome the challenge of the pandemic. Edited excerpts:
What has been the impact of Covid-19?
The economic impact in detail and via the timeline cannot yet be adequately determined or reliably quantified. We temporarily suspended our operations as a precautionary measure from March 21. This was followed by closure of all dealerships.
We have further strengthened our online offerings and have witnessed positive momentum. Even during the lockdown, we have received many online enquiries and subsequent bookings. We expect to see a shift in consumer mindset towards online purchases going forward.
We had 150 pre-owned cars booking in the Feb-March period and now we have the entire range of new Mercedes-Benz vehicles along with a host of online services.
How Mercedes-Benz is handling the crisis?
We have restarted our production in a graded manner following state government directives and have implemented all social distancing protocols and safety and sanitisation measures. Our suppliers and also select dealers have restarted operations following local authorities’ directives.
We will gradually restart our production and also reopen our select dealerships. Our online sales platforms under ‘Merc from Home’ campaign have seen good initial customer responses.
We also have also been closely working with our dealer partners along with DFS India to ensure cash flow for our dealer partners to manage their overheads. We also have supported them by rolling-out customer support packages like Standard Warranty Extension, Protection against lapsed service, the grace period to purchase an extended warranty and insurance support
The company was planning to launch 10 new products in the next 12 months. Any change in the plan?
We will proceed with our planned launches and there will be no cancellations in our plans. Due to the current situation, there may be some delays. We will try to minimise the impact on our customers.
Mercedes-Benz has one of the most diverse portfolios in the entire automotive segment comprising of more than 20 model offerings across body shapes and across segments. We are confident our product offerings will address the consumer demand adequately. We are now going to also enter the EV segment in India with the launch of the EQC.
What are the lessons company learnt from Covid-19, especially when it comes to supply chain and medium of sales, including digital?
Experience to date with the Covid-19 pandemic has shown how stable and flexible our supplier network is. Our supply chains have proven to be very robust since for many unforeseen deviations we already have standard processes in place that help us in situations like these.
Our learning from this crisis is that over time both online and offline experience will complement each. While physical dealerships will continue to remain essential touchpoints, the digital shopping experience will develop to enhance the customers’ brand journey and deepen the brand connect and trust.
How you are planning to retain your share?
We are confident of retaining our market position and our focus remains on having a profitable and sustainable business for us and our partners. We have a strong line-up of new vehicles ready for market debut in the next quarters and that we are confident will excite the customers. We also have a host of new customer offerings including the now popular online sales platform that provides an alternative to indulge into online shopping from the comfort of their home.
When do you expect the market will open up? What should the government do to revive demand?
We cannot predict any timeline to recovery at this current moment as we have only started to reopen our dealerships gradually since last week. It will take months for things to stabilise and we hope for positive customer sentiment around the festive period
A short-term policy push from the government at this time would be a major boost that can spur growth back in the sector.
How are your other businesses including used car, rental, shared and leasing doing now?
Mercedes-Benz has completed five successful years of its pre-owned car brand ‘Mercedes-Benz Certified and today Mercedes-Benz India has the highest market share in the organised pre-owned car market
Mercedes-Benz Certified has sold over 20,500 units of pre-owned cars over the last five years and witnessed 20% cumulative growth. Owning an asset is still very much in preference over leasing, and that has been our experience, as a car purchase in India is driven by emotions
Also, the interest structure for the independent leasing bodies and tax benefits to individual buyers are some areas to be looked into to make leasing popular. However, this mind-set of people is gradually changing even and with DFS we are also coming up with innovative schemes to make this option more attractive to buyers.