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For Merc, the human touch is as critical as the digital play

Murali Gopalan | Updated on October 10, 2019 Published on October 10, 2019

Martin Schwenk, MD & CEO, Mercedes-Benz India   -  Kamal Narang

Martin Schwenk, Mercedes-Benz India chief, says ‘friendly coexistence’ is the way forward

It is a telephone interview and it is, therefore, difficult to see the reaction on Martin Schwenk’s face.

“I am still one of the guys who believes that you have to see the metal,” reiterates the MD & CEO of Mercedes-Benz India when asked if digital will be the way forward for car buying.

“By the end of the day, there are customers who want to see the cars and drive them. We have to keep this (business model) intact,” says Schwenk. This said, he maintains, that the shift to digital is only inevitable though the basic brick-and-mortar retail model will be equally relevant.

“We firmly believe that our company and the entire industry will transit to a digital space which is more than what it is today,” continues Schwenk. It also puts in context why Mercedes recently launched an e-commerce platform as well as an initiative on connected cars. By the end of the day, this is a field that everyone is getting into and “we will offer a competitive portfolio of services”.

In e-commerce, the company will have a “sleek and customer-friendly solution” that will enable selling everything from new cars to pre-owned cars and accessories on line. This will be an additional retail channel and Mercedes expects a quarter of its sales generated on the e-commerce platform by 2025. Schwenk admits that the goal is ambitious but not entirely unrealistic given that India is moving at a “remarkable speed”. The growing interest in mobile devices and the penetration of the internet also “makes us believe that, even in the luxury segment, people want to interact with us”. Needless to add, it will be among the many channels which will play its role along with the human touch offline.

“I think it will be a friendly coexistence which is fruitful working together,” he continues. According to him, customers can be “very random” where they can interact both in showrooms and online too. To that extent, a mesh of offline and online activity will remain when it comes to buying vehicles.

According to Schwenk, there will be customers who may prefer online since they like the convenience it offers. On the other hand, there are products of value, “and we consider ours as belonging to this segment”, where customers want the personal action, the human touch and the relation with dealers/sales/after-sales.

“We need to make sure that both avenues work hand-in-hand because many people are not of the one or other kind, but both kinds. They want online, offline and our job is to make it as seamless as possible,” says the Mercedes India chief.

Online effect

In a nutshell, this pretty much implies that investments in traditional brick-and-mortar dealerships will continue since they make tremendous business sense. “It is my belief that the online space/representation will create additional traffic in the offline world. Both will complement each other rather than compete with each other,” he adds.

Mercedes-Benz India will, therefore, continue focussing on adding more dealerships and strengthening its retail presence even while ensuring that the online space grows. The size of the showroom will vary across regions and the formats suitably adjusted for smaller cities and towns.

For instance, if there is space for one or two cars, the digital part becomes the showcase for the product. “I don’t think we will reduce our footprint or change our strategy in terms of being close to the customer,” reiterates Schwenk. By the end of the day, “how do you sell an AMG brand if you don’t have somebody to listen to the engine? I just cannot imagine this happening”!

So, it is a bit far-fetched to expect people to treat online buying of a car as they would to a refrigerator or washing machine? Schwenk says it is quite conceivable for some people to consider a car as a commodity. “The more you go into mobility, there will be more financing options and you may not have any lifetime commitment,” he elaborates.

For next-gen buyers

This is perhaps truer for today’s generation of buyers who, unlike the preceding generation, may not see any reason for passing their car on to their children or even grandkids. They may choose to use it for a couple of years and go in for something else which means “it becomes more of a commoditised approach”.

This is when people feel more comfortable with online buying. On the other hand, if it is a purchase for the family, customers would still appreciate personal interaction at dealerships. “I think the future depends on a host of issues: there could be customers who may see it (a car) more as a tool in their daily life,” says Schwenk.

Effectively, this means that an automobile does not necessarily become an aspirational possession. There could also be changes in ownership behaviour thanks to the mobility disruption wave where users may want to return the car in 2-3 years. This is happening in India too, albeit at a slower pace, and it will be interesting to see if this trend grows in the coming years. Mercedes-Benz also believes personalisation/individualisation of products and services is important and sees this trend gathering pace. In the luxury space particularly, this helps immensely and “we believe this will gain momentum”. This is borne out by the fact that while the market crawled in the first half of the year, the AMG brand “sold more than ever before” with a growth of 47 per cent.

“For us, it is our most individualised and personalised offering. If you have the right product and get an opportunity to personalise it, obviously digital tools will enable that and it will support the customer experience,” says Schwenk.

Digital drive

The transition to digital also means that Mercedes-Benz is rebooting the way it has been selling cars thus far. From his point of view, the entire customer experience needs to be managed differently. Within the company, one of the top priorities is to constantly evaluate the challenges and opportunities in the digital world.

“We have to address this appropriately in organising things differently. We are now working a lot more closely with dealers where it is a two-way process in generating ideas in order to work towards a common goal,” says Schwenk.

Are Indians still uncomfortable about being associated with luxury? On the one hand, people are quite blasé showing off their jewellery more than anyone else in the world and, yet, there is a distinct awkwardness in seeming to flaunt wealth/luxury.

“I think there is a trend of people in India spending more on themselves than in the past. They travel a lot more and are interested in doing things which will help the car industry and companies like us in the luxury segment,” says Schwenk.

After all, if they can drive a Mercedes in the US, why not do it here in India? Likewise, if their kids can spend $1,000 on a pair of shoes overseas, why not buy reasonable brands here, he reasons. “This is what globalisation is about where spending behaviours are changing. I think there is a strong future ahead in terms of higher disposable incomes where people will spend more on themselves,” says an upbeat Schwenk.

Published on October 10, 2019
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