 "Eberhard Kern")
It is amusing to see printouts of my sketchy LinkedIn profile on the dining table, but it does not surprise me: I had been well briefed about Eberhard Kern's passion for doing his homework. So, in the 15-odd minutes of spare time before I join him for lunch, I discover that the Managing Director & CEO of Mercedes-Benz India has already figured out my background and Business Standard's circulation figures.
The habit of doing his homework well in advance is reflected in many things that Mercedes has done over the past 11 months since Kern took over, not least the "robustness" of the horns in the company's cars in India. "In my home country, Germany, and in most other parts of the world, horns are used only in emergencies. However, soon after coming to India, I noticed horns are used more as a conversation tool; so my R&D team has added some extra muscle to them to ensure that the conversation can go on uninterrupted. After all, our job is to delight our customers," Kern, 49, says with a big smile.
We are at Mekong, the very long and vast restaurant on the 37th floor of the Palladium Hotel in Mumbai's Lower Parel - the 390-room premium hotel was renamed in September after Shangri La and Pallazio Hotels ended their partnership abruptly. The steward informs us that the restaurant serves cuisines from China, Thailand and Vietnam, countries that fall along the course of the 4,300 km-long river after which it is named.
The Mercedes veteran (he joined the company straight from school at the age of 19) says his brief time in India thus far has taught him several things - first, customers in the north love to show off while those in the rest of the country look more at the utility value, which explains why a large percentage of the bigger cars in the Mercedes stable gets sold in the north.
Second, he finds the sheer geographical dispersion mind-boggling. In Russia where he spent five years, sales were mostly concentrated in two cities, Moscow and St Petersburg. And in Taiwan, his last posting before India, sales were miles ahead of Russia's and India's but were concentrated in just one city, Taipei. In contrast, Mercedes sells less than 45 per cent (down from 70 per cent three years ago) of its cars in Delhi and Mumbai. This explains why the company has set up almost 60 touch points in 32 cities and towns - the widest reach among all luxury car brands in India.
Third - and he finds this hugely surprising too - even in the super-premium segment, there is a huge bias for diesel cars, unlike anywhere else in the world. Almost 80 per cent of Mercedes sales in India are diesel versions.
Fourth, he thinks Indians are catching up with compact luxury very fast - whether it is smartphones, or sound systems - one reason the company came out with India's first compact luxury car - the hatchback A-Class and the diesel version of the B-Class this year.
Another thing he has learnt quite early in his stint is that Indians are the most difficult customers in the world because they want only the best at the lowest possible price points. "We have, however, taken it as a huge challenge. It involves a lot of sweat but at the end of the day there's huge satisfaction when a customer is happy with the experience of owning a Mercedes," Kern says.
He has spoken almost non-stop and I now know why Kern has acquired his considerable reputation as a master salesman. His wife, Ulrike, who has also joined for lunch, says in mock-seriousness that her husband has never given such detailed answers to her questions in their entire married life.
Sensing my confusion over the extensive menu with several pages dedicated to each of the three cuisines, she offers to order - Tom Yum soup for both of us and chicken soup for her husband; prawn & chicken dim sums, a variation of something that looked like vegetable pakoras; and crispy boneless chicken with honey and rice.
Kern doesn't waste much time resuming his favourite story - the spectacular turnaround of Mercedes in India. "Mercedes is back," he announces rather triumphantly, referring to the sharp increase in sales at a time when the economy is in reverse gear.
He is certainly entitled to his triumphalism. Kern came in at a time when sales had dropped nearly one-third and Mercedes fell to third place behind BMW and Audi in a market it used to dominate since its entry in 1994. Numbers for the July-September quarter this year, however, showed Mercedes has zoomed past its two German rivals, with a 58 per cent year-on-year growth in sales at 2,696 units. Today one out of every four Mercedes cars sold in India is a compact car.
He gives several reasons for the change in fortunes in 2013, named by the company as the "Year of the Offensive" (2014 will be the "Year of Excellence," he says). In hindsight, it was an appropriate label since the company launched seven new models this year and the eighth is expected in a fortnight.
"The reinvention of the brand was aimed at tapping women, self-drivers and young professionals who are entering the automotive market. We were earlier seen as a largely male brand but the stress on style, design and sportiness helped us cater to these new segments," Kern says. The earlier segment of customers was only a CEO or the owner of the business. But the current segment also includes the CEO/owner's son, or his wife or others between 20 and 30 years old.
Kern says this is not the first time the brand finds itself in the throes of change. "Mercedes has always been about innovation. For instance in 1982, the year I joined, we launched the Mercedes-Benz 190 what was also called Baby Benz. This was the predecessor to the C-Class. It was like opening up the brand to new segments since we never had a compact offering till then. The same happened when we launched the SLK in 1990s, a compact roadster that was copied by many others," he says.
And Kern himself has loads of experience in dealing with turnarounds. India, he says, was a little like what Mercedes faced in 2005 in Russia. Mercedes sold less than 5,000 cars in 2005 in Russia, when Kern took over as the sales & marketing head. Sales went up sharply to 40,000 a year when he left the country to become MD of the company in Taiwan. And India, he says, would go a similar way because everything is in growth mode despite the apparent slowdown. The Stuttgart-based carmaker expects total Indian luxury sales to rise to 280,000 annually by 2020, or 4 per cent of the total forecast car market, from 1.2 per cent now.
New models, however, are just one part of the turnaround story. There are several more: guaranteed resale prices across its range; increased financing options; option of leasing cars instead of purchase; and better after-sales service through schemes such as My Mercedes, with innovations such as diagnosing problems with its vehicles anywhere in the country by experts based in Pune via satellite.
For dessert, Kern asks for fresh mangoes with ice cream, but the steward looks sheepish and says it's difficult to arrange for the king of fruit in November. Kern settles for whatever fresh fruit is available, while I opt for mango pudding. Ulrika skips dessert.
The one area, Kern says he is working on right now is reducing the waiting period for his cars, given that customers are put off by the long wait. That's why the company is doubling its Pune plant capacity. In fact, during the year, Mercedes-Benz India became the second market outside the US to start local production of the ML-Class and GL-Class SUV. Although the company is also trying to bridge the time gap between the global launch of a model and its India entry, Kern says the "Indianisation" process - right-hand drive, bias for diesel cars, etc - sometimes makes the delay unavoidable, though he is determined to change that.
The turnaround story has kept him so busy that his other interests - tennis, soccer, surfing, sailing and alpine skiing - have had to take a back seat. However, the only silver lining for him and his wife is that both are also fond of travelling. Since the work involves a lot of listening to customers, the Kern couple, who live in Pune where Mercedes India is headquartered, gets plenty of opportunity to mix business with pleasure.
