Companies

We need to recalibrate expectations for the year: Mercedes-Benz MD & CEO

S Ronendra Singh New Delhi | Updated on September 10, 2019 Published on September 10, 2019

MARTIN SCHWENK, MD & CEO, Mercedes-Benz   -  Kamal Narang

It’s very difficult if the targets are sky-high, says the MD &CEO of Mercedes-Benz

Luxury car companies such as Mercedes-Benz India have also been affected by the slowdown in the Indian automobile industry, with the impact quite visible both in the first quarter as well as the first half of this calendar year. The company sold 6,561 units in the first half of this year, a 19 per cent fall against the same period last year (it sold 8,061 units in January-June last year). In an interview with BusinessLine, Martin Schwenk, Managing Director and Chief Executive Officer, Mercedes-Benz, said the company has revised its target for this year and that a lot of offerings are being made to customers for the upcoming festival season. Excerpts:

How are you coping with the current market scenario?

We have seen a softer market, and our customers are also affected by liquidity and finance problems. Many of them are also business owners, so they have bigger concerns than buying a car. We are also part of the industry and cannot be separate from them.

What measures are you taking?

We relatively did better in the beginning of the year. We managed our inventories, specifically with the dealers, to make sure that they are not hurt too much. Cost of capital and availability of funds are big issues, so we tried to support our retail network so that they can actually support us in sales operations. The other thing we did is that we have now laid out quite a few attractive product offerings. For example, ‘Wishbox’, a different financing option to take away the initial hurdles of purchasing a car. I have always said that that the ‘key-to-key’ actually means to buy a car, you first take it for 18 months and afterwards we will renew the car with a new model of the same car; and you keep paying the same EMI. So, we are trying to keep great offerings, and we have seen a substantial increase in footfalls and also on conversions over the last 3-4 weeks. We are working with dealers’ capability — upgrading product offerings — and again, in October, we will have quite a few launches coming up. That will also support further momentum.

If you are offering the products for 18 months, what do you do with the older cars?

These cars will end up in the ‘used cars’ section of the market. The idea is to essentially upgrade the customers as most of them connect with global launches, which are not yet available here. So, we tell the customers, ‘no need, you can get the new generation of the same car’. And, for customers who want to test the brand themselves, we have very good offerings in the same brand, and basically that is future-proof. In the sense, the new generation is delivered to them one-and-a-half years later. So, I think, that is a great idea.

Your sales number last year was quite impressive. Do you think you would be able to reach a similar level?

After the sales in the first quarter, we have already reviewed our target. We reduced our inventories and expectations to be able to deliver accordingly. It is very difficult if your targets are sky-high and cannot make it to the level. When you don’t have any momentum in dealerships and your own team, I think you need to have a holistic approach. We need to recalibrate the expectations for the year, but by how much will be known at the end of the year. We really have to look at how the festival season pans out.

Are there any other offers during the festive season, apart from what you have mentioned above?

Yes, of course. There are 4-5 different offerings for the festival season, apart from the Wishbox, that already combines innovative and customised Mobility Solutions with five primary features – Key-to-Key Change; 25-25-25-25; zero down payment; Star Agility+; and comprehensive insurance. We also have offerings in financing along these options, and there will be some surprises, too.

What’s the update on your BS-VI vehicles?

We have almost two-third of of cars converted to BS-VI and, by the end of this year, we should be done with BS-IV cars. All our products should be ready with BS-VI by the end of December.

Published on September 10, 2019

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