Mercedes-Benz looks to smaller cities for better sales growth

German luxury carmaker has lined up 12 new models for 2016

How many new dealerships Mercedes-Benz India intends to add?
At the moment, we have 83 outlets across the country. That’s by far the highest number of dealerships operated by any luxury carmaker in the country. We are already present in 40 cities so far. Like we have said, we are going to add new 10 dealerships this year. However, that doesn’t mean that we will expand to 50 cities because some of them will come up in those cities where we already have presence. We will have a few of them in tier I cities such as Mumbai and Delhi, but majority of the new dealerships will come up in tier 2 and 3 cities as we intend to broader our reach and be closer to customers. We want to reach out to tier 2 and 3 cities as that will be overall direction.

You have recently launched Mercedes Maybach S600 Guard VR10 which is priced at Rs 10.5 crore. How many units of this model you have sold so far?
We have launched this model in India with 15 days of its global launch on February 22 this year. However, we don’t give out any specific vehicle data. Therefore, we can’t disclose sales details of this model. Moreover, we don’t have a volume target for Guard vehicles in India. Customers who buy Guard vehicles are very sensitive about their details and make a request to us not to reveal any details. However, there is a good demand for this model in the country.

What kind of sales you are targeting this year?
We intend to sell more units than our sales of 13,502 units in 2015. Generally speaking, we expect double digit growth in 2016. However, as I said before, it’s too early to say about the growth at the moment because we were caught by surprise by the decision in 2015 of the diesel vehicles ban in Delhi. Of course, tax increase is always something that makes planning a little bit more difficult because we often need to give our dealers a few months of time to see that hike will not affect our volume potential. We are certainly hopeful that we will be able to maintain 2015 growth level of 32 per cent. But it’s unrealistic to assume that we reach on top of 32 per cent again. We are working hard on that. But nobody knows what is going to come throughout the year. We have already seen two disruptions (diesel ban and tax hike). So, we toned down a little bit I would say.

What is the diesel-petrol sales breakup for Mercedes in India?
In Delhi market, diesel sales have gone down to zero as we don’t have a diesel engine available under 2- litre capacity. In the rest of India, the sales are as they have always been. We don’t see any big difference in the diesel sales rates. So, diesel vehicles still account for 80 per cent of the total sales while the petrol models make up the rest.

What about Mercedes’ manufacturing facility in India? Are you able to utilise entire production capacity?
We have a plant at Pune, which can produce 20,000 units annually. At present, we are producing around 11,000 units locally and the remaining sales are through CBU (completely-built units) models. Though we have some (unused) capacity, exports from India doesn’t make sense given the tax structures in India and other countries. We prefer to produce for local market as there is taxation and duty scheme in place. For example, if we export to Singapore from India, it will be unviable because our cars from India will be far more expensive than those from Germany. So, there is no point in exporting our cars from India.

How the luxury car segment is doing in India now?
Luxury car market is still in its early stages in India. Luxury car sales accounted for just 1.3 per cent of total car sales in India last year, which means around 38,000 units. It was a single digit growth for the overall segment. So, luxury segment without Mercedes is flat in terms of growth. That way, we are really boosting the segment. We hope there will be more good players coming into this segment. This stand of mine may sound strange and weird to you. But I strongly believe that there is lots of growth potential in India. The 38,000 units out of total car sales stand at lower end in the worldwide comparison. In other countries, luxury cars account for five to eight per cent of total car sales while it’s just 1.3 per cent in India.

How many new models Mercedes India has lined up for 2016?
We had drawn up plans to bring in 12 new models in the current calendar year. We have already launched three new models including the iconic Mercedes Maybach S600 Guard VR10. We will roll out the remaining nine models during the course of the year. The upcoming models include SUVs and sedans. We will bring in Mercedes-Benz GLC, an SUV, and S Cabriolet, a convertible.