‘It is also about creating fans, and not only about sales’

By: | Published: September 4, 2017 11:52 PM

The current leader in the luxury cars category, Mercedes-Benz India is focussing more and more on the young customer.

luxury cars category, Mercedes-Benz, Roland Folger, Mercedes-Benz IndiaRoland Folger, MD and CEO, Mercedes-Benz India.

The current leader in the luxury cars category, Mercedes-Benz India is focussing more and more on the young customer, the non-metro populace and how important it is to create fans of the brand. Roland Folger of Mercedes-Benz India speaks to BrandWagon’s Shinmin Bali on the sidelines of the launch of Mercedes-AMG GT R and GT Roadster about all this and more. Edited excerpts:

How would you define the typical Mercedes-Benz customer in India?

Our customer profile has gradually evolved with the change of our product design, changing dynamics of the market and the emergence of younger customers. With the launch of the new A-Class in India Mercedes-Benz became the cool and hip brand for the young successful Indian aspiring to own a luxury car. These young customers earlier didn’t consider a Mercedes-Benz, which was viewed as a relatively staid product. With the new A-Class, customers started viewing Mercedes-Benz as a brand they can associate with. As a result, over the last couple of years, the average age of our customers has been steadily going down and is currently at 37 years, which is one of the lowest for Mercedes-Benz globally. In fact, for our performance brand AMG, the average customer age is even lower at 30 years.

Within the brand’s portfolio, which segment contributes maximum growth?

Strong growth came from the SUV segment which grew by 31% in H1 2017, with GLE emerging as the highest selling SUV in Mercedes-Benz’s portfolio followed by the GLA and GLS SUVs. Forty percent of our national sales volume comprises SUVs, with the locally manufactured GLA, GLC, GLE and GLS witnessing high demand across the nation. Similarly, we have been witnessing steady growth from sedans, our new generation cars, performance cars and the dream cars segments.

In the Indian market, where do you see the growth potential for the company?

Mercedes-Benz India draws 55% sales from outside the key markets of Delhi and Mumbai. Smaller towns are evolving fast and a key thrust will be to expand to newer markets that have long-term potential to grow. Customers from tier II and III cities are equally brand conscious, follow a global lifestyle and are attracted to luxury products and services. There will be a strong push for expansion in tier II and III markets as future engines of growth. Mercedes-Benz India dealerships are transforming into luxury car destinations and present an unmatched brand experience to discerning customers. As a result, we see more of younger customers drawn to dealerships across markets. We have our network spread in 87 outlets across 42 cities.

We also see a huge potential if the government decides to grow the luxury car industry and helps us create demand. Of the entire passenger vehicle market in India, luxury cars comprise merely 1.2% of the market, estimated at less than 40,000 units annually. If there is a focus on rationalising the tax structure and making luxury cars accessible to many more aspiring successful Indians, we see a tremendous growth opportunity. It is notable that the penetration of the luxury segment in India is one of the lowest globally, even lesser than some SE Asian markets.

How does the company reach out to a tier II or a tier III customer?

We realise that India is a vast and varied market and we are striving to grow the luxury car segment in those markets which are not yet exposed to luxury motoring. There are smaller markets where the customer has the taste and aspiration of buying a luxury car, and we are moving closer to these customer bases. With our experiential marketing events like Star Showcase and Brand Tours, we reach out to those markets proactively where we do not have a direct presence. We just don’t put up a truck there to gain some eyeballs and wrap up; we organise full-fledged events with customer interactions and immersive brand experiences to try and understand their requirement, their taste in products and also make them aware of our brand ethos.

Our financial service colleagues ensure that customers are given a holistic view of owning a Mercedes-Benz financially, and how financing has made owning a Mercedes-Benz easier and hassle free. The aim is to make them understand how different Mercedes-Benz is from other mass and luxury brands in the market.

How much of production happens locally in India?

Currently, Mercedes-Benz locally produces nine models, achieving up to 60% of localisation for most of our products. India is the first country in the Daimler world that locally manufactures an array of products, such as NGCs, SUVs and sedans, all under one roof. We also hold the accolade of being the only country outside Germany to locally manufacture Mercedes-Maybach S 500.

What efforts does the brand take in engaging its customers?

It’s not only about sales numbers, but also about creating new fans of the brand and connecting with them on an ongoing basis. We use engagements to keep building affinity towards the brand. For our discerning customers, we hold driving events such as Winter Drive in exotic locations around the world. For example, select AMG performance cars customers experience the thrill of driving around on a frozen lake bed in Arjeplog in Sweden and Lungauring in Austria.

In India, we conduct experiential engagements like Luxe Drive, which is as much about the raw excitement and adrenaline rush as it is about experiencing luxury first-hand. This is held in around 12-14 regional cities each year, in addition to regular test drives. Luxe Drive is essentially targeted at potential customers who want to upgrade to a Mercedes-Benz. Additionally, events like Star Off-Road bring alive off-roading capabilities of our vast SUV range.

The Indian market, since 2015, has had many upheavals (global economy ripple effect, demonetisation and GST to name a few). How has that affected Mercedes-Benz India’s business?

We still think the GST rollout is a strong decision that has the potential to open up the luxury car industry for an anticipated growth. But the increase in cess by an additional 10% was not required and it is going to create an impediment in the segment’s growth this year as well, and affect long-term planning for our products and pricing.

Towards the beginning of the year, there was confusion regarding GST and postponement of sales. However, the implementation of GST rates has helped the economy overall. Demonetisation also impacted sales and there was muted growth in Q1; however, its effects are weaning off gradually.


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