Company Description: The
relationship of the Mercedes-Benz brand with India dates back to 1950s when the
company introduced trucks into India with local collaboration with Tata Motors.
Daimler, its parent company, officially
entered the Indian market and set up Mercedes-Benz India Ltd in 1994 as its 100
per cent strategy. The company was later
renamed DaimlerChrysler India Private Ltd after the merger of parent company
Daimler with Chrysler. Mercedes-Benz India pioneered the luxury car market with
launch of the E-Class in India in 1995. After DaimlerChrysler sold off most of
its equity interests in Chrysler in 2007, it changed its name to Daimler AG. As
a result, DaimlerChrysler India was renamed Mercedes-Benz India once again.
Mercedes-Benz established a world class production facility spread over 100
acres in Chakan, Pune in 2009 with an investment of Rs. 250 crore. While the
C-Class, E-Class, and S-Class models are assembled locally, others like
GL-Class, M-Class, CLS-Class, SLK-Class, SL-Class, CL-Class, New E-Class Coupe,
E-Cabriolet are fully imported from Germany. The new R-Class as well as the AMG
range of performance cars including the recently the SLS AMG have also been
added to its CBU portfolio.
Your sales figure for the
nine months period from January to September 2010 indicates that you have done
around 4157 units and this is for the first time you have crossed the 4000
mark. Can you clarify this?
Yes, we have crossed the 4000 mark. In any given year we
had never crossed 4000 units but now we have done it and that too in nine
months. Our previous highest was 3650
units sales for the full year in 2008. And here we are talking about 4157 in
the wholesale and 4221 in retail in nine months. We generally have two figures—wholesale
figure and retail figure. Wholesale means manufacturer to dealer. This is more
authentic because all excise duties have been passed, but retail figure cannot
be cross checked. SIAM figures always mean wholesale. But our competitor only
gives retail figure to SIAM and does not give the wholesale figure. For all
companies when it comes to sales figure it is wholesale figures but when it
comes to BMW it is retail.
So to what do you attribute
your sales growth?
The non-metro areas have done much more than our
expectations. Honestly speaking, Delhi and Mumbai have always been the big
markets for luxury cars. Three years back these two metros contributed to
around 60 to 70 per cent of the market. But they have now come down to 50-55
per cent of total sales. This majorly proves that the tier II cities are
contributing more. Thus the new India is not just confined to the big metros
but also to the tier II cities. IS it because they have become richer? No, they
primarily always had the money. But they were very conservative in their
spending. They never thought that their big money could be spent on a car. They
used to lead a simple life, invested in land and buildings etc but now with
better infrastructure, their needs have changed. Better roads led to need for
better cars. Mumbai to Pune is now a two hours journey rather than a five hours
journey, similarly Delhi to Chandigarh is a mere three hours journey. Also the
penetration of banks to tier II cities led to easy finance for consumers. Also
lifestyles have ben changing and people in the tier II cities believe that they
too need to lead lives like those of their urban counterparts. Lastly the
scepticism in these tier II cities that buying a luxury car will lead to
unwanted attention has also more or less gone.
All these have expanded the market dramatically.
Mercedes-Benz India CEO Dr
Wilfried Aulbur recently remarked that
his company is not really in the number game but “we have the ambition to
lead”. Now is it not a number game eventually?
Not really. We do not want to fight the number game. If
numbers mean leadership we are not in the game. We are very open and blunt
about it that we are not looking at the number game. At the end of the day, we
are doing business for profits. We are working for our investors and it hardly
matters whether we sell five cars more or five cars less than our nearest
competitor, but it definitely matters if we make more money or less money. In a
high technology company there is a huge amount of money that is spent on
research and development so as to better our technologies. So if your profits
are low, then you cannot re-used the money for such purposes. Globally if we
see we have 8.6 per cent returns as compared to around 5.5 to 6 per cent
achieved by our nearest competitor that means we are making far more money. Our
returns are the highest in the world. That is our focus and will remain our
focus as far as our business philosophy is concerned.
At the same time
customer satisfaction will remain our focus too and numbers will not matter. In
the process if numbers happen, then it will be well and good. But in the
process if the numbers come down then it is not the biggest challenge for us.
Unlike in a volume car industry, in a luxury car industry it is the products
and the variety that matters, not five cars more or five cars less.
And coming to the
leadership part which Dr Aulbur talked about, primarily we are talking about
perception leadership where Mercedes Benz should be looked upon as a leading
brand not in numbers but in technology. Today we are talking about 17 to 18
products that is variety of products which is an outcome of technology. Numbers
is also function of de-contenting the
car and selling it a lower price, and this is not an area we want to focus on
because we are serving a different segment completely.
Is there a delay in Daimler
setting up a financial services arm in India?
There is no delay. The biggest decision here is the
internal approvals for bring in the DFS because it is a 100 per cent Daimler
company so there will be equity investment. The internal equity approval at the
global level has now been cleared. The decision to invest and come into India
is already through and the formal approvals from the regulatory bodies are in
process. We should be up and running in
some time. We may not start will the entire gamut of services offered globally
but initially we may do that gradually. We will launch the primarily products
like retail funding, insurance, leasing etc.
Will it only be financing
It is a Daimler company. It cannot finance other company
products. It will be financing Mercedes car business products from Pune and the
Daimler truck business products from Chennai. By 2011 we hope to set up the
finance company in India.
What is the real purpose of
these ‘Mercedes Star Fascination’ events that your company is organising at
dealer ends? Is it all fun and games?
At the end of the day our way of selling is such that we
do not give discounts. We also do not sell de-contented products. We say that
we fundamentally believe in product range and variety. At the end of the day we
are targeting customers who have surplus money but do not have time to come to
see our products in our showrooms. We are trying to create a reason for the
customers to come to our showrooms. Star Fascination fest is one of the reasons
to do that. We are doing 30 events in the country in a span of two months only
in showrooms while one event is focussed on fashion for which we have tied up
with Manish Arora fashion designer. We will also be retailing in our showrooms
a lot of fashion accessories designed by Manish and inspired by Mercedes Benz. Why fashion show? Mercedes Benz is a great
fashion player globally. With a such accessories, there is one more good reason
to come to our showrooms, other than buying a car. While the men can buy their
cars, the ladies can pick up anything from a scarf to a bag. Of the 30 events I
mentioned, 15 are fashion related and 15 are drive related. We have got Gran
Tourismo which are basically SLS AMG play stations These have been especially
imported from Sony. These are simulators wherein you can feel the drive.
Your R-class is a vehicle
targeted at the luxury MPV segment that has hitherto not been really exploited
in India? Is there a huge potential there?
I will not say there is a huge potential but yes, it is
a potential to be evolved and seen. If
you see cars like the Innova, they have been a huge success. That is the normal
sedan segment of Rs 12 lakh to Rs 14 lakh. The R Class is a big car and
traditionally people love driving a big car especially when it comes to
travelling as a big family. But again, some people like a big car but that has
an SUV image. It is how you want to be
perceived as. Some like the aggressive outlook and want to go for an SUV that
gives an aggressive look. But if someone
wants a 7-seater that looks like a car and yet offers more than a car, then he
can go for a R-Class. If you also look
at the luxury hotels that ferry people to and fro to the airports, they too
look for a spacious car. The R-class is the right answer.
When do we see the likes of
the A-class and B-class coming to India?
Globally these products are going through a complete
change. But we also have to see whether the Indian car market is mature enough
to accept a hatchback at a particular price point. Thus it is not a question of
whether we can bring such a car or not into India but whether the Indian
consumer can accept it. We are very serious about it, we are studying it but we
have not yet come to any decision on it. But it does not mean it will not
happen and it also does not mean it will happen tomorrow morning.