The Indian market will shift to EVs faster than we think: Mercedes-Benz

Santosh Iyer, Vice President, Sales and Marketing, Mercedes-Benz India speaks about the luxury EV segment and data protection.

2021 has been a rollercoaster ride for the automobile market starting from the second lockdown due to the pandemic to some positive signs of growth in the car market and finally, the year was affected by the global shortage of semiconductor chips. Even with all these challenges, Mercedes-Benz India managed to sign off 2021 with a strong sales growth of 42.5% and delivered 11,242 units as compared to 7,893 units in 2020. Santosh Iyer, Vice President, Sales and Marketing, Mercedes-Benz India, speaks to Express Drives about how the luxury car segment is trying to bounce back, the upcoming vehicles for 2022 and much more.

Mercedes-Benz India continues to be the leader in the luxury automobile segment for the seventh year in a row. How do you see 2021 pan out for both Mercedes-Benz and this sector as a whole?

Overall, 2021 was one of the most challenging years we have faced especially with how the COVID second wave affected us all. This led to a big gap for two-to-three months in between and then the industry was hit by semi-conductor shortage followed by logistic issues. Mercedes-Benz India, on the other hand, launched many new products that were well received by the customers, followed by introducing new initiatives like Retail Of The Future that changed our business model. As a result, the company retained its volumes and posted a growth of 42.5% in 2021. A lot of work was done to make the cars more content-rich, ensuring we lead in in-car connectivity as we are one of the few luxury brands that have now more than 59,000 connected cars, which is quite critical for Indian consumers. As we managed to meet the expectations of the consumers, this helped us take a major share of the market.  

Unfortunately, we haven’t seen significant growth in the luxury segment in 2021, but based on our overall estimate, even though all the brands haven’t released their numbers, the market must have grown by 35-36%. By us growing by 42% means for sure we have increased our market share, but that’s not the most ideal situation because what we want is an overall growth of the luxury market, and see more customers enter this segment.

Many first-time luxury car buyers have entered this segment via the pre-owned car market route. As we see the demand rising in the luxury pre-owned car sector, how do you see 2022 will fair?

The pre-owned car has grown due to two reasons. One, many consumers are looking for luxury cars, but on the other hand, the price of the pre-own cars has also gone up because the new car pricing is very high followed by the unavailability of the new cars. This is due to high demand like a GLE isn’t available for the next three-to-six months or even a GLS. So, the older GLS models are fetching good prices that are prompting customers to upgrade and exchange, which is why we are witnessing the used car market growing.  

Secondly, we’ve introduced a new initiative called Marketplace where a customer can put his or her car up for sale at a Mercedes-Benz outlet if they feel their car should get a better price than what the dealer is offering. Without any additional cost to the customer, we will market it and whatever price is offered we will offer it transparently. This further fuels and gives confidence to customers by providing a neutral platform for both those who are interested in selling and buying our cars. For the customers who are coming to buy these cars, we are giving them a full health checkup of the car, telling them its status, how much will the repair work cost and the warranty status. Therefore, transparency helps us build trust and confidence. So even in 2022, we expect Mercedes-Benz used cars to significantly grow.

Mercedes-Benz will locally assemble the first luxury EV in India, the EQS. What will be the challenges the company will face in rolling out EVs?

Some of the challenges have already been met. Two years back when we launched the EQC, the big questions were is India ready for EVs and do we have the charging infrastructure as it was initially limited to six cities. Now, two years down the line, we have a supply issue, but a strong demand. We have delivered many cars and we have 100 charging points across India. More importantly, other luxury brands have also launched EVs or are in the process of joining this segment. Apart from manufacturers, there are some private players and even state electricity boards that have started setting up charging stations. We can see an ecosystem is developing and this can be achieved when we work together in tandem. Like Mercedes-Benz, there are other brands that also offer their charging outlets to competitor cars and this is important because it is our responsibility to increase the production of EVs in India. We will also work with aggregators and charging operators to see how we can further improve and expand the network in the country.

Apart from this, EV range anxiety is a question that customers always ask. If you see the EQC offers a range of over 300 km and the EQS can be driven for over 600 km in a single charge, which means the future will offer more range. This also answers questions like can I do a Mumbai-Goa or Delhi-Jaipur trip as there are numerous charging stations coming up. So, we as manufacturers should now take the lead which will show a clear sign of intent to increase the EV portfolio and solve charging issues.

Initially, when we launched the EQC, there were concerns about whether customers are ready to adopt an EV? Today I’ve met so many customers, who all have said from feedback while receiving their brand-new Mercedes-Benz that their next car will be an EV. So, if we develop the ecosystem, introduce new products and early adopters keep buying EVs, we are sure that the market will shift faster than we expect.        

One of the major stumbling blocks in the four-wheeler EV segment is the high import duties. Do you see the situation changing anytime soon?

There have been many representations made to the government by us and others to reduce import duty, but the government has a very clear view and that is to manufacture locally. We believe that the economy should be more open that will help in developing world-class manufacturing and export capabilities. We would love it if the government relooked the overall automotive sector and the import policy, but currently, we don’t see that happening.  

Mercedes-Benz India had announced that there’s a backlog of around 3,000 vehicles. What are the reasons for this and which models are affected by this?

Models like GLE and GLS, whose base kits come from the US, are affected due to high global demand and that in turn makes production capacity worldwide difficult to meet. So be it G-Wagon, GLS, GLE and even GLA, we are facing challenges and hence the constrain. To add on top of this is the semiconductor issue and how to shift several components of the car from one place to the other. We cannot produce a car till the last component isn’t fitted, may it be the smallest part like a wheel hub. With Covid, many suppliers are facing lockdowns and that only adds to the overall supply chain challenges in production. So, all this is a cumulative factor.

On the other side, even though the demand is high, our customers love the brand and are ready to wait as some models have a waiting period of seven-to-eight months, which also depends on variants like petrol and diesel. We are transparent about the availability of a car. All this information is available online at Shop Mercedes-Benz. We don’t want to wrongly commit to a customer and then delay the delivery.

Tell us how Mercedes-Benz’s new direct customer sales approach, Retail of the Future (ROTF) is fairing?

We introduced this concept in October last year and we all know numbers speak louder than words and in the last 70-80 odd days we have sold more than 2,500 cars under this model. We have also received more than 3,000 booking orders through this system. More importantly, we have done Rs 1000 crores of business via this new model and payments have come directly to Mercedes-Benz India via different banks, including Mercedes-Benz Financial Services and customers have received invoices directly from us. The bigger challenge for us is to deliver the customer the promise that we have given, a seamless customer journey, a better customer experience and this is where we along with our franchise partners are pushing the bar by doing simple things like not charging handling chargers. So, if it’s not mentioned in the quotation then it’s not there in the final invoice, which is appreciated by the customers.

With the global shortage of semi-conductor chips, how has that changed the strategy of Mercedes-Benz India?

There are two ways of looking at this shortage. Either we de-content the car or we give the same car to the customer. In India, we decided not to de-content the car and second we have been transparent to the customer by letting them know how long is the waiting period and this means a lot of communication with the customers. In the past, this was challenging because we didn’t have the customer data with us, but now the Future Of Retail system has the entire data and now we can communicate with them directly. The overall supply chain has also changed as our production colleagues are actually airlifting parts once a week by chartering flights. These are things that were previously not heard of in the earlier era, but it’s now required because the line is there but due to certain components the car isn’t ready. On the other hand, there are times when we have already committed a car to the customer, but the chip or a certain component hasn’t arrived, so we can’t deliver it. So, these are the challenges we and our partners are coping with it.

The Maybach S-Class will be launched in India in March. Will it be locally assembled like the current S-Class?

We will offer two options. If anyone wants to completely customise the car, it will be available in CBU format and then there will be a fully-loaded locally manufactured model where the customization will be limited to the colours and upholstery. We will soon announce the date for the launch and the Maybach S-Class will be the first product that we will introduce this year.

Data protection is one of the hottest topics. What are the steps Mercedes-Benz is taking to ensure this remains secure?

For us, we have two types of data. One is the data coming from the car and as we have 59,000 connected cars, that’s a lot of data we receive. We use it responsibly where the customer receives a value of the data like being able to predict the car’s service time or how can we proactively reach the customer. Sustainability is the second one, which is not limited to the ecosystem or the environment as even data protection comes under this. There is the data a prospective customer who shares it with us when they are browsing through the website. Whether it’s an online or offline journey, we have tools and CRM systems where it’s a prerequisite for us to get the right consent from the customer then we proceed on the journey. So we are fully geared up and are following international standards when it comes to data protection. This is also one of our key tents for 2022 to see how we can safeguard, store data and use them responsibly.

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