Mercedes-Benz India is sitting on pending orders which is equivalent to three months of sales. Such is the demand that some of its models take as much as half a year to be delivered to their owners. To further up the ante, India will become one of the few global markets where the EQS, the most premium and luxurious electric vehicle from Mercedes-Benz, will be locally made. In an interview with BusinessLine, Martin Schwenk, Managing Director and CEO, Mercedes Benz India shares his plans of launching at least new 10 models in 2022. Edited excerpts:
Where does India stand in world ranking in terms of size of the market?
We are still at the lower end of the ranking. Major markets like the US, China, Europe have significantly higher numbers than we have with these 11,200 cars in India. Thailand and Australia also have higher numbers. We are still a smaller market in the context of the kind of wealth and population India has. But we have far more potential than many other markets.
You have pending orders of more than 3,000 units. Which model is most in demand?
The GLS is the one which has a waiting of 6-8 months. So, in that sense the GLS has the highest demand. For other models like the GLC and E-Class, we have a significant order bank for those too. The pain point for customers is certainly in the large SUVs where these waiting times are not ideal and we are doing everything we can.
How bad is the condition of the logistics network with regards to the container shortages?
We have significant shortages of semiconductors which we try to mitigate as much as possible but on the other hand, it’s the whole complex network of supply across the globe. Containers, Covid-related issues, lockdowns can hit you anywhere not only in your own production, it can also hit suppliers who deliver to other suppliers. At least for the next six months, we do not see any change in the situation.
What is the reason behind going for the local assembly of the EQS?
Simply because it is expected that the volumes will be significant for the model. EQS is the flagship electric vehicle of Mercedes-Benz. It falls in the limousine category where we have very successful cars. I am more than convinced that we have customers who want this car in India. It, therefore, makes sense to invest into the flagship car production in India. I expect reasonably good numbers that can make it profitable to be locally produced.
Mercedes’ best sales came in 2018 when it sold little over 15,500 units. When do you think you can reach that level again?
We have all the ingredients to have a very good year. We have a strong product portfolio. We have the new retail sales model which has picked up very successfully. Technically, we are set up to have one of the best years. On the other hand, it is extremely hard to predict given the challenges over the supply chain. The supply situation will not allow us to reach best-ever numbers.
Are we expecting any supply disruptions because of rising number of Covid-19 cases in Europe?
We have not seen any specific situation which can hamper supplies from Germany as yet. The cases are rising but they are not as severe as last time. We have not seen so far, any situation where suppliers had to shut down production because of the rising number of cases.
Will you relook at prices because of cost pressures?
We have taken price hike continuously in the previous months and in the beginning of this year. But we have to monitor the trend. On one hand we have the exchange rate which I am hoping has stabilised. But inflation has been hurting us more and you can see it hitting the entire value chain. At some point in time, we will see that in our input cost and will have to do something.
What was the increase in 2021 as against 2020?
We do the increase model-by-model based on the demand, supply and features. Some cars did not have an increase while others had a 5 per cent increase.
What is the minimum and maximum waiting period on your cars presently?
The minimum is probably around four weeks for the A Limousine for which we had good supply in the last couple of months. The worst is the GLS where we are looking at 8 months waiting. 95 per cent of our volumes comes from domestic production.