Premium push sends Merc racing to the top

It is barely four months since Roland Folger took over as MD & CEO of Mercedes-Benz India and he has seen a lot of action already. First, the Supreme Court banned registration of 2000cc-plus diesel vehicles in Delhi for three months, which was a big blow to his company. This was followed by the news of BS VI emission norms being advanced to 2020, a move which Folger welcomes wholeheartedly.

The icing on the cake, though, is Mercedes-Benz emerging as the top player in India’s luxury segment in 2015 after a break of six years, during which time, fellow German rivals BMW and Audi had surged ahead.

“This is a particularly sweet achievement as we have been planning for quite a while to get back to the position in which we strongly believe we belong. Everything we worked on, right from dealer expansion to exciting new vehicles, has come together really well,” says a delighted Folger.

He is also quick to add that it’s not about volumes alone but the larger goal of increasing brand acceptability. “It is not enough to throw new products into the market and hope for things to fall into place. You need a strong network to support this and customers are happy with the service we provide,” adds Folger.

“It was not easy to stage this turnaround and involved enormous levels of dedication, training and investments. Today, there is a young generation of customers in India which swears by the brand.”

The new slogan for 2016 is ‘Winning with Mercedes-Benz’.

While this was largely prompted by the stupendous growth over last year, the company has also moved forward on the financing side with new schemes that have helped the turnaround story.

“The emotional part was important in this slogan as it gives the team and stakeholders some targets and this is important in a large organisation where you need to agree on something,” says Folger. It was also prompted by the Formula 1 win which, in turn, is a powerful message on team spirit and a never-say-die attitude.

“It is also a subliminal message to us, our dealers and after-sales support in winning the hearts and minds of our customers,” he reiterates, adding that Mercedes has always maintained it is not in the business of buying market share by merely offering generous discounts to get a stronger foothold.

“We have to convince customers of our service and better resale value so they understand why they pay a premium for our vehicles. It is not money wasted but well invested. If you combine this with a sporty package, people will have a reason to buy Mercedes,” says Folger. Going forward, the company wants to create “something else” that will change the way people look at cars in terms of design language.

Headquarters in Stuttgart is also upbeat on India, especially when other growth markets like Brazil, Russia and South Africa are not in the best of shape today. China is also slowing down which enhances India’s standing on the Daimler roadmap. At present, the luxury segment is less than two per cent which means there is tremendous untapped potential especially with growing income levels.

“It is no longer about ostentatious spending and I believe from past experience that once you reach a certain threshold of volumes, it is normal to see more luxury cars on the roads,” says Folger.

According to the Mercedes CEO, growth patterns in India over the last 5-10 years show that when something big is about to happen, it eventually does not. This is true not only for cars but across the mobility spectrum which includes buses and trucks. In his view, if this “holding back kind of sentiment” is unshackled, the market will take off, like China did a decade ago.

In the midst of this buoyancy is the grim reality of the diesel ban, which “came as a big surprise”.

The silver lining is that discussions are underway to resolve the issue. Ideally, the Centre should figure out what it needs to focus on and prepare an action plan. “Better planning will help us earmark our investments and this is important for the credibility of a country too,” says Folger.

On the issue of advancing BS VI norms, the Mercedes chief is all for it. “The earlier we start, the better, as companies here are exporting and the technology is already there. I always wonder if they can export to Europe, why they cannot do this in India. Are lungs here different and do not deserve as much protection as European lungs?” asks Folger.

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