SIP vs Mercedes! Twitter says India's strong savings mindset is need of the hour

Retail investors and financial influencers on Twitter slammed Mercedes-Benz India's top executive's comments that the luxury car business is getting impeded in the country as more potential customers are opting for a monthly SIP.

Santosh Iyer, Mercedes-Benz India's sales and marketing head, told Times of India that unlike the West, India has a strong savings mindset owing to weaker social security measures and Indians end up savings for themselves and their kids.

"While there are 15,000 people inquiring about luxury cars every month, the actual order size is about 1500 units. So, there are still 13,500 customers who desire to own a Mercedes-Benz, but postpone their purchase thinking that its fine, maybe, I should continue (with) my SIP or maybe the next dip (in markets) is there," he said.

A systematic investment plan (SIP) helps people enter stock markets in a stress-free manner where they invest specific amount every month to compound their wealth over the long term.

Iyer's comments came under heavy flak on Monday and termed them as being tone-deaf and being unaware of India market.

"Mercedes complains about India's SIP culture. They actually want Indians to abandon ours, our kid's future and buy a Mercedes car? Unreal," tweeted Neil Bahal, Fund Manager & Founder, Negen Capital PMS.

"Owning a Mercedes today is not as sexy as it was in 2000. We see it everywhere today. SIP has got nothing to do with it. A person who wants to buy a Mercedes will have his money invested in better avenues," said a Twitter user

"Cheapest Mercedes in India starts at INR 50 Lacs and comes with an EMI of INR 80,000. India's avg monthly SIP amount is

"Ironically, if one starts SIP early, it can even purchase a Mercedes," read another tweet. 

"Mercedes C class went from 30lac in 2012 to 60 lac in 2022. Maybe that could be the reason? Habit of saving has always been there in Indians. SIP growth shift is largely from bank deposits, not disposable income," read another tweet. 

Zerodha CEO Nithin Kamath said on Twitter that a savings mindset will come in handy at a time when rising interest rates threaten to obliterate economies whose debt-to-GDP ratio is very high.

Kamath tweeted, "A saving mindset is what will help us in times like now when countries that have borrowed heavily are getting screwed? In a world of rising interest rates, this will probably get much worse before it gets better for them."

"Isn't slow & steady growth much better (like compounding in investing) than debt-fuelled explosive growth where people borrow to buy depreciating assets? Neither good for customers nor for businesses in the long run. Btw, I hope this is a misquote & is not what it reads," he added.