Minutes before I meet Eberhard Kern, the MD & CEO of Mercedes-Benz India, I go through half-yearly sales figures (January-June 2014) of the company and find that it registered 25% growth over last year and also launched seven cars this year. ?The GLA-Class, in fact, is out eighth launch in 2014 and we will end the year with 10 new cars,? says Kern, soon after we have exchanged greetings at the Hyatt Regency in New Delhi. He is in the city to launch the GLA, the company?s first compact luxury SUV for the Indian market.
?This has been a very successful year for us. Apart from the launches, we now have the densest network presence for any luxury car maker in India?65 outlets in 36 cities. Further, we opened three new AMG Performance Centres in Delhi, Bangalore and Mumbai; are in the final stages of expanding our production facility in Pune to 20,000 units at an investment of R250 crore; and sold 4,717 units in January-June 2014,? he says as we take our seats.
Just a day earlier Kern was in Kochi, having opened a new showroom in Kerala. ?Rajasree Motors in Kochi is almost as large as our flagship showroom in Delhi?in fact, it has display space for as many as 19 cars,? he says. ?Our goal was to open 14 new dealerships in 2014 and we are on the way to achieve it. By the end of this year we will have over 70 dealerships. Put another way, we are getting closer to our customers.?
It was in the end of 2012 when Mercedes-Benz India decided to call 2013 as the Year of Offensive. The oldest luxury car player in India was fast losing market share to its German rivals BMW and Audi and a strategy to regain the foothold was needed. ?When we came up with the Year of Offensive strategy, we had four focus areas in mind. First was having a good product portfolio, second was to increase our network, third was to correct the brand perception, and fourth was focused on total customer ownership,? Kern says. ?In 2013 we started bringing to India the latest products?which embodied Mercedes-Benz?s new design language?and launched 10 new cars. Then, towards the end of 2013, we decided to call 2014 as the Year of Excellence. We again planned 10 car launches and the GLA is the eighth. I must add that we simply didn?t import cars into India, we Indianised them?for example, the GLA gets a higher ground clearance (to suit Indian conditions) than the European model.?
At the same time, the company has been working towards improving the brand experience, where its focus has been on providing its existing and prospective customers a ?real? luxury experience. ?The events we do?AMG Driving Academy, Young Star Driver Programme, Star Drive Experience?have gained such a mileage that customers feel rewarded being associated with the Mercedes brand.?
How much has this approach rewarded the company? ?A lot,? Kern says, adding, ?This year?s sales may turn out to be 50% more than what we sold in 2012. We are by far the fastest growing luxury car brand in India today.?
A couple of years ago the media took Mercedes for a ride, calling its models old-man?s cars. Kern smiles when I bring this up. ?I have been in India for 1 year and 9 months, and I heard this statement only during my initial days here,? he reasons. ?Okay, if we used to be a father?s car, now we are also the son?s and the daughter?s car. Today, a Mercedes car belongs to the young and successful,? he further reasons.
The GLA is perhaps the most important launch for Mercedes-Benz India this year. Priced from R32.7 lakh onwards, it will primarily compete against the Audi Q3 and BMW X1, both of which are compact luxury SUVs?a segment that is growing quite fast. ?We didn?t have a product in the compact luxury SUV space and that?s why the GLA is crucial for us. How attractive this segment is can be gauged from the fact that the GLA got more than 600 bookings and we opened the booking window just 18 days ago,? he says. With the GLA, the share of SUVs in Mercedes India?s total sales?currently 25%?will only grow.
Apart from SUVs, another segment where the company has been focusing on is high-performance cars, which it brands as AMG (in layman terms, planting more powerful engines into regular Mercedes cars). ?Today, the AMG has become the most accessible and most recognisable performance-car brand in India. It fits the Indian market perfectly because AMG cars aren?t really sportscars?it?s just that they perform like one. You can have a sedan AMG, you can have an SUV AMG, you can have a luxury car AMG and so on. For example, our ML63 AMG has the performance of a sportscar, and the driveability and ground clearance of an SUV. On a weekend you can drive it on a track to experience the adrenalin-rush associated with a sportscar, and on a weekday you can use it as your regular SUV for the office-commute.? Currently, the performance car market size in India is about 1,000 units a year and Mercedes-Benz enjoys a leading share.
Where will the Indian luxury car market reach by 2020? Kern estimates the total car market to touch 50 lakh units by 2020. Of that, luxury cars will constitute 4% (2 lakh units), while today that share is only 1.5%.
Next month Mercedes-Benz India will celebrate 20 years of its operations in the country. Kern is quite upbeat. ?Our total investment in India amounts to R850 crore, which includes investment towards doubling the capacity to 20,000 units,? he says. I remember having met the vice-president, Corporate Affairs & HR, Mercedes-Benz India, a few months ago and his statement that the company has 0% attrition rate among blue-collared employees. ?I feel proud of this fact and it is a good sign?we are the employer of choice. Imagine the kind of knowledge and experience our employees have because they have stayed on with us. And this gets reflected in our manufacturing process. The quality of manufacturing at our Pune plant is on par with any of the Mercedes factories across the globe,? Kern says.
I ask him about PM Narendra Modi?s ?Make in India? initiative. ?We have been part of the ?Make in India? campaign inauguration and are impressed by its vision. We welcome the initiatives the government is taking to focus on manufacturing in India. We are confident that the future of the industry in the long-term is bullish and Mercedes-Benz is committed to the Indian market and customers,? Kern adds.
As he readies himself for the launch function, I ask him where will the new customers come from?small towns, women, first-time buyers? ?All of those. I have found that India is not a country where 2-3 major cities are your primary markets. Yes Delhi and Mumbai are our major markets but they form only 45% of our nationwide sales, the rest 55% sales come from the rest of India which also includes smaller cities. Today, our customers are everywhere in the country,? he says.
If 2013 was called the Year of Offensive and 2014 the Year of Excellence, what will the company call 2015? ?You will get to know soon,? he smiles.