The first three months of 2019 have been rough for Mercedes-Benz in India, owing to a dip in sales. The luxury carmaker hopes to get back on track with an eye on tier II and III markets, investments in new products and its retail network. Martin Schwenk tells Ankita Rai what Mercedes-Benz has learnt in its 25 years in India. Edited excerpts: In Q1 2019, Mercedes-Benz India\u2019s sales declined by 14.7% compared to Q1 2018, whereas BMW India saw a 19% sales growth in the same period (selling 2,822 units). What\u2019s your strategy to stay ahead, as the likes of Audi and Volvo catch up? India is a difficult market, but we are able to maintain our leadership position with around 40% market share. Despite strong macro-economic headwinds in the form of rising interest rates, inflationary hikes, a liquidity crunch, rising import costs, etc, we sold 3,885 units in Q1 this year, thanks to customer loyalty and a fundamentally strong brand. We are bullish on the medium to long-term prospect of the Indian market. The focus is to invest in new products and technologies in our retail network and digitisation to keep ourselves future ready for the foreseeable transition in the automotive segment.We have kick-started 2019 by introducing the V-Class. Our diverse portfolio, which includes new generation cars (NGCs), exclusive sedans, luxury saloons, SUVs and the performance range, is our strength. Also read:\u00a0Reliance Jio inching closer to Airtel, still not the 2nd largest telecom operator in India How has local production affected sales? We have a portfolio of nine locally produced products that comprise more than 80% of our sales volumes. Local production helps us pass on the duty benefits. All our volume models \u2014 long wheelbase S-Class and E-Class models \u2014 are produced locally. The plant in Pune has a production capacity of 20,000 units in one shift. Currently, there are nine completely knocked-down models in our fleet that are locally produced \u2014 Mercedes Maybach S 560, S-Class, E-Class long wheelbase, C-Class, CLA luxury sedans, and the GLA, GLC, GLE and the GLS luxury SUVs. What is your dealership strategy in the tier II and III cities? We have 97 outlets in 47 cities currently, the highest by any luxury car manufacturer. There is a new wave of interest especially from tier II and III markets. Last year, we opened dealerships in Hubballi, Jodhpur and Aurangabad. This year, we have launched four outlets \u2014 one in Kolkata and Kochi, and two service facilities in Delhi. We will also inaugurate two new touchpoints in Nagpur. Tier II and III cities contribute nearly 25% to the overall sales in India. The growth in tier II and III markets is higher than metro cities. It is driven by the availability of after-sales service and an increase in the number of outlets in these areas. Our retail networks are adapting to new-age, digitally savvy customers who look for real-time info and convenience. We have launched real-time offerings such as digital service drive, interactive video wall, etc, in our retail outlets. There are exclusive AMG Performance Centres \u2014 special retail zones catering to our high-net-worth AMG customer \u2014 in Mumbai, Delhi, Hyderabad, Pune, Kochi and Bengaluru. Service differentiation has been key to new customer acquisition. We launched Service on Wheels, a first-of-its-kind digital service drive last year to provide service personnel to customers in the tier II and III regions where Mercedes-Benz doesn\u2019t have a direct presence. We recently completed the first phase of this service, catering to over 250 customers across 25 cities. What role does digital play in your marketing strategy? While we will continue to focus on traditional platforms like print, there is increased emphasis on engaging the audience through digital. For example, last year we sold around 2,500 units through the leads generated on our website. For a luxury brand, expectations are different and human touch plays a crucial role. At present, you can order test drives and accessories online. We are not selling cars online, but we use online to engage customers and address their queries. As we complete 25 years this year, the plan is to channelise our marketing efforts majorly through content about our rich legacy, iconic products and the milestones we have achieved. With regards to marketing and retail, the focus is on the emerging tier II and III markets, and benchmarking experiential events like Brand Tour, MercedesTrophy, Luxe Drive, AMG Emotion-Tour, and Mercedes Certified Carnivals, among others. Live events are a great way to connect with people.