Auto focus

At Mercedes, digital is key amid the pandemic

Murali Gopalan | Updated on June 25, 2020 Published on June 25, 2020

Martin Schwenk MD and CEO Mercedes-Benz India

From product launches to retail, it is online all the way

‘The future depends on what you do today.’ It is this famous line of Mahatma Gandhi that Martin Schwenk, MD & CEO of Mercedes-Benz India, had quoted during a recent town hall meeting with his colleagues. “This quote has so much meaning to me because it clearly implies that if we do not stand together now, we will not be strong in the future,’ he says. While the company has already outlined its motto for the year — Restless for Tomorrow — Gandhi’s profound words will play a big role too especially in these challenging times.

Clearly, from Schwenk’s point of view, things have changed dramatically during Covid-19. Today, as Mercedes is putting its house together again, its leadership team is aware that normal life will not quite be the same again.

Before Covid struck, the company had targeted online sales accounting for 25 per cent of the overall retail component by 2025. The momentum seen during the past weeks seems to indicate that this will now happen sooner than later. “Online will be an additional channel and behaviour patterns will also change to an extent with people spending more time at home. Customers will be comfortable if they are safe and secure, which means having their cars preferably delivered outside their apartments,” says Schwenk. Covid-19 has caused a great deal of paranoia. In this backdrop, “contactless experience” will be a big confidence booster, which means online consulting will be preferred “for everything, right from technical to commercial”.

Yet, it is not as if this will completely take over the conventional buying experience. “We will get people back into showrooms for sure but the convenience of buying online from home will also gain traction as a trend,” says Schwenk. According to him, Covid-19 will only “accelerate trends” like work-from-home as well as digital launches of cars. The good part is that this shift will cut down on big spends and prompt companies to become more cost-conscious. This make a lot of sense at this point in time when the auto industry is under financial strain and “everyone has to look into their own pockets” and ask themselves how best they can weather the storm. Travel will also come down in a big way and contribute to more savings.

The way forward

Likewise, marketing “and other elements” can be rebooted/influenced with no agencies involved during launches since this will be done completely in-house “with our own people”. As Schwenk puts it, “All this will give us the learning on how to move forward. It will challenge the way we have worked in the past and also to find a balance.” With world ire directed towards China as being the perpetrator of the virus, there have been furious debates on the imperatives of seeking de-risk solutions. This typically would take the way of creating alternative sourcing hubs even while it is not something that can be done overnight, especially in a globalised world.

“In our products, supply chain decisions are mid- and long-term strategies. We rely on the Daimler global sourcing strategy,” says Schwenk while dwelling upon the topic without being India-specific. This strategy is based on building parts in those countries where they are sold while sourcing “as much as we can in a viable way” through a global supply chain. While there are no two ways about the fact that Covid-19 has been a “severe and serious challenge”, Schwenk says there have been other disasters that have occurred in the past, too, but life has still moved on. “The ability to manage tier 1/2 suppliers is highly developed in the auto industry,” he says.

Even during Covid-19, for instance, it is not as if supply chains “are crumbling”, which pretty much means that it is possible to manage the situation even though it could lead to reprioritising a product or variant. “It is a mix between securing supplies and managing demand,” says Schwenk. By the end of the day, it is important to “see transparency continue” in the processes where automakers know what is happening within the overall supply chain.

“This helps us to act when we know where we are hit. Right now, there could be some delays but it is done in a way where customer impact is minimised,” says Schwenk. The Mercedes India chief is also pleased with the way his team responded to the challenge of working from home. “Our company is built on trust and it is not about checking out people all the time but to provide results,” he says. Some particularly tough tasks were achieved successfully online within the stipulated period.

Published on June 25, 2020
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