Two months into his India tenure that began in October 2015, Roland Folger, the new Mercedes-Benz India (MBI) chief, had to contend with a Supreme Court directive on diesel engines that will have a considerable impact on the company’s sales in the country. Speaking to BusinessLine at the Auto Expo, where Mercedes unveiled a new SUV and the Cabriolet, both headed for India, Folger said a more holistic view to curbing pollution is needed.
Have you settled into your new role?
I like it more everyday; the Indian market is so diverse, so fascinating in its sheer vastness that everyday is a new experience, so I am still learning.
You have announced that MBI will bring in 11 more products in 2016. What swung it for the GLC?
Last year our SUV portfolio grew 100 per cent. That is an indication that there is something happening in the marketplace and we are basically catering to that. We have five models that directly cater to those needs and, with the GLC, the overall offer from our side is complete.
The GLC, formerly named the GLK, was only available in left-hand drive. Initially there was some hesitation on the market size for right-hand drive and the numbers that were coming from markets like Australia and India were not justifying the investment in the unique RHD version.
In the meantime, that segment has been growing explosively, also in markets like Japan and India, so the RHD was launched in June last year globally. We expect to launch it here in the second half of 2016 and also make it in Chakan. It will be the ninth model that will be built locally.
How will the ban in NCR on diesel engines over 2 litres impact you?
The ban affected mainly three brands — M&M, Toyota and us. And it affected us to a nearly 100 per cent range and NCR being 20 per cent of our market place, it would be unrealistic to say that we don’t expect any impact.
Frankly speaking, more petrol is a not a good solution as with petrol the CO2 level rises. We are trying to convince the justice system of this. If extended to the whole year, a maximum of 4,000 vehicles of a total of 200,000 would sell less. And these are not the vehicles that would save that much emission that it would even be noticeable.
The solution is either you ban much higher degree of diesel — then maybe you would see some positive effect. But since pollution always worsens in winter, we don’t want to have the same discussion again next year.
We would find different solutions and move forward. For us it already exists in our portfolio — it means bringing in Euro VI engines.
We have them in our portfolio and would like to introduce them to India if possible. We could bring them as early as 2018 and even earlier, in 2017, if the gas stations could supply the fuel. The present bottleneck is the quality of fuel.
We could also think of bringing in our hybrid version, thereby further eliminating pollution. (In the meantime) we have shifted more petrol versions to the market here from other parts of the country and the former ratio of 80:20 has now turned in favour of petrol.
With 13,000-plus units, you grew 32 per cent last year, when the luxury segment grew less than 2 per cent. How do you expect this year to pan out?
With the effect that we see from the overall situation in NCR, it is extremely difficult to make any projections, simply speaking, since we don’t know what is going to happen.
If they want to continue this it’s going to get ugly. The other issue is we don’t know whether other cities will also pick up this ban.
Even customers have a little bit wariness and insecurity on whether diesel will now ostracised. The government has given commitment to reduce CO2 levels by 25 per cent. Between diesel and petrol, diesel is much more efficient on CO2 emissions — so you trade your particulate problems with CO2 problems.
If you start killing diesel you will create other problems. So I am very much against simple populist solutions.
There is good reason that diesel is still choice No I in Europe and US, and it is not because they go a long distance. Countries realise that to get a grip on CO2 emissions, diesel is the only choice.
Having now taken the No 1 spot in the India luxury car market, what next?
It is only fair to assume that all competitors will try very hard and we welcome competition as it keeps us on our toes. What we don’t like so much is a skewed approach…this decision in Delhi was very much in favour of our competitors as they have other vehicles.
Any other special success in India?
We have been able to bring down the average ownership age from 45 to about 37 and that means we are becoming relevant with the younger crowd. On buying age, we are way lower than the global average. China is slightly lower; we are ahead of Germany, the rest of Europe and the US.