We faced the challenge of an incomplete portfolio: Mercedes-Benz India

Roland S Folger, MD & CEO of Mercedes-Benz India , talks to Chanchal Pal Chauhan about how he attained pole position in India's luxury car market.

Q: When did Mercedes realise that it was lagging behind in the luxury car market and what was the strategy to get back to the top?

Folger: We faced the challenge of an incomplete portfolio, and we required a fresh design language to expand our customer base. While we were highly successful in retaining our loyal customers, we were assertive in our conquest for new customers. The strategy for a successful comeback to the No.1 position in India was based on consolidating our areas of strength and simultaneously working overtime on the emerging opportunities. We curated our 'Year of Offensive' strategy in 2013, and followed it up with 'Year of Excellence' in 2014 and 'Live the Best' strategy in 2015. We tweaked it, keeping the customer in mind. Accordingly, we are focusing on different pillars to create best experiences for customers: best products, network, production facility and the best brand connect.

Q: How has the growth been so far?

Folger: We have grown ahead of the luxury industry and registered a strong 34 per cent growth in the Jan-Sep 2015 period, selling more than 10,000 cars for the first time in a nine-month period. I believe that a customer is the final judge of whether a strategy is working. We are glad to see our customers appreciating our strategy of 'Live the Best', as we registered the best ever sales for Mercedes-Benz in India.

Q: How did Mercedes implement the strategy to regain leadership in the domestic luxury car market?

Folger: We decided to create a new benchmark in the luxury car market and keep our customers at the centre of all our endeavours. We introduced a new body language for our product portfolio which fascinated the customers. We pioneered new segments in the luxury car segment periodically, offered our customers new products and kept them attached to the brand. As a strategy, we also maintained a price premium vis--vis others, as we offer only feature-rich, top-of-pyramid products. Our financial programmes and service offerings are the best in the industry and have provided immense value to our customers.

Similarly, our network reach is unmatched, and we are expanding to both existing metro markets as well as emerging non-metro markets. Mercedes-Benz is extremely lucky to have some of the best dealer partners in the business who really understand the pulse of the market and are our direct interface to the customers. In India, for the last 21 years, we pioneered the luxury car industry. This success is attributed to the customer trust which we have earned over the years, the product and our services. It is this impeccable trust that distinguishes us from the competition.

Folger: After spending a good deal of time working in the overseas market, my initial experience in the Indian market is that Indian customers are highly value driven. They are more value driven than price conscious, as the perception often is. Indian customers are well-travelled, aspirational and successful, and want the best of luxury motoring experiences. They are well-read, well-researched and passionate about their purchases, just like customers in matured markets in the West. Indian customers are, however, more demanding than their global counterparts and are extremely diverse in terms of culture, language, preferences, and are looking at an overall ownership experience than just the product.

Q: How important is India in Mercedes-Benz's aspiration from a global context?

Folger: It is our target to become the No. 1 luxury car maker by 2020. With the growth rate this year of 34 per cent over last year, India has become a very strong market in this growth strategy. India will become one of the most important markets for the Mercedes-Benz brand as well.

Q: Which is the most critical segment for growth?

Folger: We have seen strong growth from the SUV segment recently. Our SUVs grew by 70 per cent over last year, and pose the largest growth potential in a realistic condition. That will continue with the launch of the GLE today. Also, the sedan segment, in spite of all the other influences, has grown by 39 per cent this year, over last year. The entry versions, GLA and CLA, still command waiting lists; it is not to do with the fact that we are not producing enough, but more to do with the fact that there is a strong demand for these vehicles. For us, these vehicles have a different goal; they are not here only for market share, but help us get in touch with younger customers with whom Mercedes-Benz has had difficulty engaging. I was very surprised when I learnt that the average customer age in India is 10-12 years younger than the average customer age in Europe. When you get a customer at a younger age, it is easier to keep them with the brand.

Q. What is the lesson for the auto industry from the emission and safety issues that have surfaced and also raised ethical culpability of many important global players which may have huge repercussions in the future?

Folger: I can only comment from Mercedes-Benz's point of view on this topic. We share the indignation about the use of unlawful means to manipulate emission tests. Our engines meet and adhere to every legal requirement; we don't manipulate. Our vehicles are not manipulated and have not been manipulated in the past! We have never used a so-called 'defeat device' - a function that improperly restricts the effectiveness of exhaust gas after treatment. That applies to all of our diesel and gasoline engines worldwide.