Mercedes-Benz sees Tier2/3 cities driving growth

Luxury car maker Mercedes-Benz is upbeat about its business prospects, particularly the Tier 2 and 3 towns and cities. “The year looked challenging at start, but we have in the first nine months of 2017 registered a growth of 19.5 per cent compared to the corresponding months of the previous year. There is wealth in smaller cities.

“While customers are enthused to own a Benz car, they had to take the vehicle either to Chennai, Bengaluru or Coimbatore to have it serviced. Our ‘Go to Customer’ strategy has helped make in-roads in such towns. We foresee huge potential for growth in smaller cities,” Santosh Iyer, Vice-President – After-sales, Retail Training, Mercedes-Benz India, said.

Company sources said 300-plus Benz cars had hit the road in and around Salem.

To service its clientele, the company has started to strengthen its after-sales footprint in the South aggressively.

After inaugurating its first luxury car workshop in Salem, Santosh Iyer told BusinessLine that the company has opened seven such workshops in the South this year and plans to add four more — one each at Trichur and Chennai and two in Mumbai within the next four weeks.

Sundaram Motors has helped the luxury car maker organise the five-bay workshop — dedicated for maintenance and repairs — at Konerikarai, Salem.

“The entire operations are digitised. Our focus during the current year is on service packages.

“While customers have the wherewithal to buy a luxury car, they have often voiced anxiety about the rising maintenance costs. By opting for the service package, the customer can breathe easy as it would entail no ownership cost. About 40 per cent of the vehicle owners have opted for the package. The starting range is ₹79,000. Package will vary depending on inclusions and exclusions,” Iyer explained.

Asked how demonetisation and GST had impacted the business, he said that “demonetisation had very little impact on business. There was a lull for some time, but business has started showing signs of pick up.

“But GST has brought in a fundamental change in pricing. Earlier, we had 28 different prices across India because of VAT, octroi, entry tax in each State and so on.

“While pricing has become uniform now, our dealer-partners say they incurred potential loss as they could not claim input tax credit on stocks that were more than 12 months old. The full effect of GST is not clear yet. We expected free flow of goods and spare parts, but it is yet to take shape. We are looking for ease of transaction.”

Sharath Vijayaraghvan, Executive Director, Sundaram Motors, said that “at the current rate of growth, it would be no surprise if India absorbs one lakh luxury cars in a few years. We need to hone skills.”

“In 2003, the Coimbatore market absorbed 18 (Benz) cars. We expect this to cross 300 very soon.”

The company is in the process of setting up a 22-bay service workshop at Eachanari near Coimbatore. The facility is expected to become operational in March, the ED of Sundaram Motors said.

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