‘Tier-II, Tier-III cities have potential. We have adopted a small-dealership format for these’

Smaller markets have relatively high growth, but the absolute numbers are still small and it will take a lot of time for smaller markets to carry the load.

By:Published: October 28, 2019 8:41:27 AM

Luxury auto maker Mercedes-Benz, which reported a 29% increase in month-on-month sales in September, recently launched its first diesel SUV, the G-350d. Martin Schwenk, MD & CEO, Mercedes-Benz India, tells FE’s Shashank Dipankar that consumer sentiment has improved in the past month.

In September you said that Mercedes will take a product-offensive stance. What are your plans regarding this?

We have just launched our new SUV, the G-350d, which is the first and biggest step of our product-offensive stance. I do not really want to spill the beans regarding the line-up of our new products. We have slated many new products and product upgrades as well in the next three to 12 months.

Some key geographies where luxury car sales were doing well are now on the decline as economic stress continues to build. Are you targeting new markets?

We know that Tier-II and Tier-III cities have potential. The company has adopted a small dealership format for these markets, which includes smaller showrooms, and only workshop set-ups as well to make our services more accessible.

Smaller markets have relatively high growth, but the absolute numbers are still small and it will take a lot of time for smaller markets to carry the load. So, at present, we solely rely on major metros for a big portion of our sales. We are planning to further expand our network in metro cities.

Do you feel consumer sentiment has improved in the past month compared to the rest of the year?

Yes, I feel that it has improved. We saw an improved number of inquiries, improved showroom traffic and improved sales numbers in the month of September. Our sales witnessed a 29% growth in September compared to August. Quarter to quarter, our sales grew by 25%. The main reason behind this growth has been our programmes such as Wishbox, along with reforms announced by the government. These measures have helped in creating a positive sentiment.

What is Mercedes’ market share?

Based on our estimations, we hold 40% market in the luxury car segment. I think we have had a stronger quarter than our competitors. Our relative performance has improved in this quarter. Our estimation tells that we are on the levels we have been on in the past.

How much impact would the transition to BS-VI have on your prices, and what about inventory management?

Early in the year, when we saw the market looking softer than what we had hoped for, we started looking into managing our inventory. Also you do not want a situation where there are no cars, so that’s why it is such a big challenge. In terms of price, we are not only looking to upgrade from BS-IV to BS-VI but also upgrading the model with extra features and adding more customer benefits, so overall the increase in price is negated.

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