The sales of top-end models for Mercedes Benz more than doubled in the first quarter of 2023. One out of every three vehicles sold by the German carmaker in Q1 was a top-end vehicle. In this interview, Santosh Iyer, MD & CEO, Mercedes-Benz India, tells Akanksha Nagar what drove the company to set a successful online platform and how 25% of its sales will come from electric vehicles (EVs) in the next 3-4 years, up from less than 5% today. Edited excerpts:
What are key technology trends driving the automobile market globally? Is Mercedes-Benz India in lockstep with those trends?
One of the key technologies is connectivity in cars — it is via the mobile phone and also car to car. There is a lot of work happening on electrification, where the entire car is getting electrified. The other big thing globally — but not so much in India — is autonomous driving. We are the only auto manufacturer in the world to be level three certified in the US for this and this is happening with software as our core. The company will soon come up with its own operating system, which will be proprietary to us.
In terms of EVs, our strategy is to not opt for entry-level EVs; for us, the localisation came from the top with the EQS in India which is the most expensive model, although it may not bring large volumes. Mercedes-Benz India currently has less than 5% of its sales from EVs; 25% of our volume will be EVs in the next three to four years’ timeframe. While we want to maintain the luxury positioning, at some point we will surely introduce products in the market to drive bigger growth. There’s still a lot of work to be done on education and customer confidence. So it’ll take 36 to 48 months for the market to start growing and the growth will come top-down, not bottom-up.
As the first Indian lead for Mercedes-Benz in the country, what is your brief?
The company is less focused on the overall volumes but more on the quality of customer interactions and overall segment growth of top-end vehicles. Hence, the biggest task for me is to ensure that we are able to deliver according to the customer’s expectations from a luxury brand. There is no race for market share or to sell more cars. My agenda is clear — to continue to be the most desirable brand in India and lead the luxury space. We see ourselves as a software company and not just a car company, so the products are highly advanced and a lot of technical expertise is needed. Therefore, for marketing, our investments are more on building communities and less on plain advertising.
In India (and worldwide), we are highly focused on the top-end of the segment. From 12% of of our portfolio (in 2018), 25% of our sales now comprise top-end vehicles — this shows the growing maturity in the luxury car market. Apart from contributing to the company’s revenue and profits, this segment also helps shape the brand because the power of the brand is demonstrated by the demand in the top-end segment. The long waiting period for some of these models clearly shows the aspiration of the Indian consumer. The company sold over 1,700 units priced at 1.5 crore or more, grossing over3,000 crore till May 2023 (January-May 2023).
The sales of top-end models for Mercedes Benz more than doubled in the first quarter. How do you see the rest of the year panning out?
In Q1 this year, we grew by 17% compared to last year and we intend to continue this in Q2. If that happens, this year should again be a great year, like last year, a record year in terms of revenue. We are looking to introduce the GLC SUV in early Q3 this year. We will introduce four more new models this year.
What will drive growth is the absolute all-time high desirability for brand Mercedes Benz. Customers are ready to wait and are ready to pay more for the product compared to any competitors. From the economics side, there is an increase in professionals buying cars, a lot of purchases are also happening within the corporate world compared to only businesses earlier — which is still the largest segment of buyers. We are also seeing an increase in women buyers, going up from 8% to 15% in cars like the Mercedes-Benz GLA.
The company sold 2,000 cars over the online platform last year. How do you plan to enhance the omnichannel experience?
Today, 15% of our sales are happening online and that figure should grow. Transparency and trust can be achieved by the D2C model only, and therefore, it surely helps us to be more convenient and interact with customers in real-time. The D2C model is definitely one of the key factors to ensure we have high online penetration. There’s no specific target — because if you drive by targets in this category, you try to take shortcuts and forget customer experience.
Every brand worth its salt is working on customer experience. As the top luxury car maker, how do you plan to elevate customer experience here on?
The plan is to transform our entire retail network into the new ‘MAR’ outlets. Over the next few years, most of our outlets will be transformed into this new landscape — which is ‘digitalisation’ of the showroom for better customer interaction complemented by a certain level of product explanation. The company has 123 outlets across 43-odd cities, at present. That apart, there is a pin-code-wise mapping we are doing based on our customer geographies and the target is our workshop should be within 30-45 minutes of the customer, wherever we have enough customer pockets in India. So, we will increase our service footprint to be close to the customer. A big differentiator for us would be the physical infrastructure. The company has opened its first boutique luxury experience centre in Kochi this year; one more is coming up in Gurugram soon; then we will go to Mumbai.