After riding the digital and electric vehicle growth for the German luxury carmaker Mercedes-Benz in India, Martin Schwenk is all set to take up another role as the President & CEO of Mercedes-Benz Thailand. Schwenk, who took charge in 2018, is known for playing a key role in preparing the company for the transition of the automotive industry and strengthening Mercedes- Benz India’s position by achieving the highest market share in the luxury car segment. businessline interacted with Schwenk on the growth of the company. Edited excerpts follow.
What are the top three things you believe you achieved as the CEO of Mercedes-Benz India?
The first would be ‘Retail of Future.’ It completely changes how the business is done and involves a high level of innovation and integration. It is direct to the consumer and complex to pull off. We are running it successfully and it is a paradigm shift from how retail business is being done. Second is the move on digital and online sales that we have established on the consumer front. Four years ago, we had zero online sales and now, 15 to 20 per cent of our sales come through the online sales channel. The company offers a sleek system online.
Third, during the pandemic, we could limit impact on our people, franchise partners and partner companies. We came quickly out of the pandemic. The final thing would be electric vehicles. When I came to India, electric vehicles were not a topic for discussion but this has changed. We led the luxury car segment by defining the first electric vehicle and bringing in three more models. We have started local production of the EQS 580 electric vehicle, our flagship vehicle. We offer 130 chargers, 30 ultra-fast chargers and ten more will come by the year end. We are working constantly with our franchise partners to support the transition.
What are the key changes in the Indian automobile industry?
The development trajectory is very positive. The development of India is also reflected in our customers. About ten years, back we had 2 to 3 per cent of female customers, which stands at 10-15 per cent today. Earlier, our customers were five to seven years older. On average, our customer age now is 42 years old. We had 1 per cent of salaried employees as customers, while most were entrepreneurs or builders. This has now increased. The trends are positive, especially in the luxury car segment.
The company recently announced up to 5 per cent hike across its vehicles in the country. Do you foresee more hikes in the coming quarter?
Times are dynamic and it is very hard to predict the future. We have seen inflationary effects. Labour, raw material and logistic costs have increased, adding to supply chain disruption. I think a lot of this is not just going away. We are still importing a significant number of components, so we are certainly hit by logistics costs. If the past is diving into the future, then there will be additional increases. Now, we do hikes at the beginning of the year so that every customer can purchase if they want to.
Mercedes-Benz India stated that the local production was around 40 per cent. Does the company plan to increase it further?
About 95 per cent of our vehicles are locally produced and we build 14 models in India. Currently, we are looking at a localisation degree between 30 to 40 per cent that goes into bodybuilding and vehicle manufacturing. Going forward, we will localise products whenever it is financially viable. To localise further, we need high end tooling, which can be quite expensive. In many instances, it is not viable.
Is there anything that you wanted to achieve and that you could not? Do you have any regrets?
I have a feeling of satisfaction that is much stronger than any regrets. I had higher hopes in terms of sales numbers and thought we would sell over 20,000 cars. The setback was unavoidable. I wanted to introduce some products earlier and some of our plans had to deal with delays. It was a hurdle, but not a regret.
What is your message for your successor?
The best message I can give is that I hope he remains the guy he is at the moment, which will lead him to success. Santosh Iyer and I have worked daily for four years. He is the right guy to carry things forward.